How Do You Calculate a 130/30 Fund? Because they combine both long and short positions, 130/30 funds can increase long exposure to attractive stocks. The fund begins with 100% long positions, then shorts the least attractive holdings 30%, using the proceeds to increase long equity exposure by 30%. This leads to a result of 130% long. How Do 130/30 Funds Work? Let’s look at a simple example to better explain the concept of 130/30 funds:...
Read on for six steps to take once you’ve paid off your debt. Keep Budgeting There’s no doubt about it. You have worked hard to pay off your debt. It can be tempting to stop worrying about money constantly and relax when it comes to spending and budgeting. You may consider cutting the budgeting completely since you’ve finally reached a major financial goal by paying off your debt. You may not want to keep worrying about money, but if you stop paying attention to how you are spending your money then you may end up back in debt....
Causing an accident as an underinsured motorist or being hit by an underinsured motorist can lead to an expensive situation. Here, we’ll consider the definition and examples of being underinsured. Definition and Examples of Being Underinsured The definition of “underinsured” may depend on the circumstances of a collision. Often, this term refers to your policy not being able to fully pay for the damages claimed because of your low maximum limits....
Filing one claim can be a chore, but filing more than one takes some thought and care. Get a handle on the claims process. Learning how multiple claims might affect your bottom line can help you to make tough choices about your policy. Here we’ll cover what’s going on behind the scenes when you file a car insurance claim, and what you should know before you file, so you can be ready for what’s ahead....
That might seem too good to be true, and there are indeed some drawbacks. Filing for bankruptcy and receiving a discharge will seriously impact your credit. You must establish to the court’s satisfaction that the discharge is financially necessary. You can’t simply ask the bankruptcy court to discharge your debts because you don’t want to pay them. You must complete all of the requirements for your bankruptcy case to receive a discharge....
People use the terms “basis points” and “percentage points” to avoid confusion when discussing the difference between the two rates. For example, suppose that the yield on a bond rose by 0.5% from 7.5%. The news might report that a bond “is up .5% from yesterday’s close of 7.5%.” You might hear another station report that a bond “is up 50 basis points from yesterday’s close of 7.5%.” Either way, you know the bond’s yield is now 8%....
As business owners explore the different ways to obtain funding, the term “blanket lien” may come up with certain lenders. A lien itself is a legal claim against an asset that has been used as collateral. A blanket lien is a lien against multiple assets. Let’s learn exactly how a blanket lien works when you might come across them, and how it can impact your business. That way, you can decide if you want to take on the additional risk of blanket liens when you are securing financing....
Learn what broad market index funds are, how fund managers design them, and some pros and cons they offer. What Are Broad Market Index Funds? An index fund is a basket of investments, such as stocks and bonds, that allows a person to purchase a few investment types in one sale. The managers of the fund disburse the invested money per the fund’s guidelines. They passively manage the fund and only make changes to the portfolio when there’s a change in the larger index being tracked....
When investing in a company, investors need to pay attention to the class of shares they’re buying. This article will cover how different classes of shares work and why they’re important. Definition and Examples of Classes of Shares When companies want to raise money by selling an ownership stake in the business, they can do so by selling shares. Investors can purchase those shares and trade them with other investors on the open market....
While subsidiary accounts are critical for recording a company’s transactions, control accounts allow for high-level analysis by simply focusing on the balances of each account. They are especially important for reconciliation in large companies with a high volume of transactions when only the balance of the account is needed. Alternate name: Controlling account, adjustment account A company that sells products on credit may have many transactions in the accounts receivable subledger....
Alternate names: front-end ratio, housing-expense ratioAcronym: GDS ratio Your lender determines your GDS ratio by dividing your total housing costs by your gross monthly income. If your GDS ratio exceeds 28% of your income, this could indicate that you’re spending too much on housing costs. For example, let’s say your gross monthly income is $6,000 and you spend $2,000 on monthly housing costs. Your GDS ratio is 33%, which is higher than most lenders like to see....
Alternate names: Strategic partnership, coalition The U.S. Small Business Administration (SBA) defines a joint venture as an entity consorting to engage in and carry out specific or limited-purpose business ventures for joint profit over a two-year period. The SBA uses this definition when determining a small business’s eligibility for government programs and preferences. According to the California law firm Stimmel, Stimmel, and Roeser, the critical elements of a joint venture typically have the following characteristics: Communal investment in the purpose of the venture Equal directorship among all parties involved, as it pertains to the venture Equal control and management of assets Equal sharing in losses and profits among all parties involved...
Land equity loans may be more readily available for more significant land acreage. Land may be more valued if it is used for agricultural, oil and gas, mineral rights, timber, or recreational (hunting) purposes. Land equity loans are not as common as other types of consumer property loans. Most land lenders will have an agricultural background, with an ability to make loans on all types of land, with some reservations, said Jeramy Stephens, partner and managing broker of National Land Realty....
When a business needs funds for a significant project or acquisition, traditional lenders may be unwilling to provide all of the money required. Creative financing approaches like mezzanine loans might be able to fill the gap. How Mezzanine Loans Work Mezzanine loans are a hybrid of both debt and equity. Depending on the terms of the agreement and how events unfold, the arrangement can provide an equity interest to lenders....
Knowing the basics of what a net worth statement means and how it works can help you have a clearer picture of where your finances stand. Also, discover how it can serve as a reference point to help you measure the progress of money goals. Definition and Example of a Net Worth Statement A net worth statement is a financial tool that shows the financial health and wealth of a company or individual at any given time....
Definition and Examples of Rate and Term Refinances After purchasing a home and acquiring a mortgage, you’ll begin paying back your loan. The amount you owe each year is called your mortgage debt service, and any payments that you make will reduce your total debt. These will vary based on the type of loan that you have, but all mortgages require payments consisting of both principal and interest. Once you have your first mortgage, you may be eligible for a refinance....
Sign-on bonuses are intended to convince competitive applicants to accept job offers and stay with the company for at least the time required to earn the extra pay. These incentives have grown more popular over time. In fact, the number of job listings mentioning sign-on bonuses has doubled in the past few years. A WorldatWork survey showed that 38% of organizations are offering some kind of bonus to their employees, and sign-on bonuses are the most prevalent at 79% of all types offered....
A taxable wage base works by identifying a dollar amount beyond which an individual can no longer be taxed for certain taxes, such as the OASDI tax. Other taxes, such as Medicare payroll taxes, are based on an uncapped percentage of income, so you’ll pay Medicare taxes no matter how much you earn. Taxable wage base amounts can vary based on the type of tax and jurisdiction. For Social Security taxes, most years, as the cost of living goes up, the Social Security Administration provides an adjustment that slightly raises the maximum amount that these taxes are based on....
A-rated insurance companies include Geico, Progressive, and State Farm. How Does an A-Rated Insurance Company Work? The stronger the financial strength rating of an insurance company, the less likely it is that it will experience financial failure and perhaps even close its doors. As an insurance customer, you need a company you can depend on to be around when it is most needed. There are several credit rating agencies that issue these letter grades....
Understanding how an account statement works can help you better manage your money and spot potentially fraudulent activity. Learn what’s on an account statement and how you can use the information to make better financial decisions for your situation. Definition and Examples of an Account Statement An account statement is a document that summarizes all your account activity for a specific timeframe. Alternate name: Statement of account, bank statement, billing statement...
