As you compare loan options, note whether or not loans feature fixed rates. Learn how these loans work so that you can choose the right loan for your needs. What Is a Fixed Interest Rate? A fixed interest rate is a rate that will not change for the entire term of a loan. For example, a 30-year fixed-rate mortgage keeps the same interest rate for the whole 30-year period. Your monthly loan payment calculation is based on the interest rate, so locking in the rate results in the same principal and interest payment every month....

Market makers—usually banks or brokerage companies—are always ready to buy or sell at least 100 shares of a given stock at every second of the trading day at the market price. They profit from the bid-ask spread, and they benefit the market by adding liquidity. Some types of market makers are known as “specialists.” A specialist is a type of market maker who operates on certain exchanges, including the New York Stock Exchange....

We’ll discuss what microloans are, give examples of how they work, and explain details of the SBA’s Microloan Program. Definition and Example of Microloans Microloans are small loans provided to help startups and small businesses thrive. They are often aimed at aiding particular groups of individuals that would otherwise have challenges getting traditional loans. Microloans can come from a number of different sources — often nonprofits, community organizations, online platforms, and individuals....

Definition and Example of a No-Appraisal Refinance A no-appraisal refinance happens when a bank or lender approves a refinanced mortgage without conducting an appraisal of the home first. An appraisal is an inspection of the home and research on other homes in the area to determine the fair market value of your property. When you refinance your home, you take out a new loan to replace your existing one. With your original loan, the bank completed an appraisal of your home to see how much it was worth....

If your distribution isn’t qualified per the IRS’ rules, withdrawing earnings from your Roth account may lead to implication of regular income taxes due on that portion and a 10% tax penalty if the withdrawal is made before you turn 59 ½ years of age. The basic IRS requirements for a qualified distribution is when a withdrawal is made: From a Roth account open for at least five tax years, starting the year you first contributedAt age 59 ½ or olderDue to your disabilityDue to your death, by or for your beneficiaryUp to $10,000 to purchase, build, or renovate your first home...

Definition and Examples of a Restrictive Covenant A restrictive covenant is a legal agreement that limits what a homeowner can do with their property as well as what they’re obligated to do. The covenant is part of the deed, which binds the homeowner to the covenant at the time of the home purchase. Homeowner associations (HOAs) commonly use restrictive covenants to determine what’s allowed within the community. Alternate name: deed restriction, or covenants, conditions, and restrictions (CC&Rs)...

Learn more about how each structured settlement is tailored to meet the immediate and long-term needs of recipients. Definition and Examples of a Structured Settlement Structured settlements are settlements given to injury victims that are periodic payments over time instead of a single lump-sum payment. Typically, a structured settlement compensates a recipient through an annuity funded by the responsible party and issued by a life insurance company. Alternate name: Disability payments...

So rather than paying a fixed dollar amount, you pay a percentage of your income in taxes, and that percentage is your tax rate. A tax rate can apply to many other areas of taxation, such as sales tax on goods and services you buy and property tax on real estate you own, in which you would also pay a percentage of the taxable value. For example, if you buy a TV in New York City for $400, you would pay a sales tax rate of 8....

Yankee CDs operate along the same lines, with one key difference: These are CDs that are issued by U.S. branches of foreign banks. These CDs may be issued to allow the bank to raise capital, which can be used to fund loans or for other purposes. They are negotiable CDs. For example, Toronto-based Scotiabank offers a variety of Yankee CDs to U.S. investors who meet the minimum opening deposit requirement of at least $50 million....

Alternate name: Unpaid invoice, balance dueAcronym: AR For example, say a plumber is called to repair a busted pipe at a client’s house. Once the plumber completes the job, they give the invoice of $538 to the customer for the completed job. That customer’s bill of $538 will be recorded by the plumber as accounts receivable while they wait for the customer to pay the invoice. How To Record Accounts Receivable Accounts receivable are recorded in a business’s general ledger and reported as part of the current assets listed on its balance sheet since these receivables are expected to be paid and converted into cash within a year....

Your last loan payment will pay off the final amount remaining on your debt. For example, after exactly 30 years (or 360 monthly payments), you’ll pay off a 30-year mortgage. Amortization tables help you understand how a loan works, and they can help you predict your outstanding balance or interest cost at any point in the future. How Amortization Works The best way to understand amortization is by reviewing an amortization table....

Learn more about assignment of contract and how it works. What Is Assignment of Contract? Assignment of contract means the contract and the property, rights, or obligations within it can be assigned to another party. An assignment of contract clause can typically be found in a business contract. This type of clause is common in contracts with suppliers or vendors and in intellectual property (patent, trademark, and copyright) agreements....

You might wonder what the average return rate is for a Roth IRA, but there’s no average return because this retirement account can earn money in a number of ways depending on your investment choices. Your return with your own IRA could be significant or minimal, or you might even suffer losses. What Determines Roth IRA Return Rates? A Roth IRA is like an empty basket. You choose what investments to put into it....

Definition and Examples of Overfunded Pension Plans Pension plans can receive contributions from employers and employees. The money in these plans is generally invested to help the fund grow in excess of the contributions. The fund covers plan management costs and pension payouts, and it compensates for market swings. Sometimes, a plan becomes overfunded. An overfunded pension plan has more than enough money to cover its expenses and benefit payouts, based on current projections....

Learn more about what makes a property uninsurable and what options are available to insure these types of properties. Definition and Examples of Uninsurable Property An “uninsurable property” can mean one of two things: The home is not in good enough condition to qualify for FHA mortgage insurance (and thereby for an FHA loan). The home is ineligible for property insurance because the insurance company considers the home too great a risk to insure....

This article explains what to include on an original cost basis and how it is adjusted over its life and reported on your business tax return. Understanding Asset Basis The cost of an asset is used to establish the basis of capital assets in a business. Capital assets are major assets that generate value for a business over a long period of time. These assets include vehicles, buildings, machinery, equipment, and furniture....

Learn more about business procurement and how it works. What Is Business Procurement? Individual businesses set procurement policies that govern their choice of suppliers, products, and the methods and procedures that will be used to communicate with their suppliers. For example, businesses often have set procedures for calling for and evaluating proposals. The procurement process involves: Identifying the needs of customers and suppliersChoosing and preparing tools and processes to communicate with suppliersPreparing requests for proposals and requests for quotesSetting policies for evaluating proposals, quotes, and suppliers...

However, not every worker is covered by COBRA, and participating will likely cost you more than what you pay for your contribution to your insurance right now. Plus, there are other options for obtaining health insurance coverage that you should consider before making your decision. Here’s what you need to know. What Is COBRA Insurance? COBRA is short for the Consolidated Omnibus Budget Reconciliation Act. This law gives certain employees, spouses, former spouses, children, and retirees who lose their health benefits the option to continue coverage provided by their group health plan....

Alternate names: business property insurance, business hazard insurance An example of commercial property insurance is a business owner’s policy (BOP), a package policy designed for small businesses. A BOP includes commercial property and general liability coverages. The property section covers buildings, machinery, and other business personal property located at the business’s premises described in the policy declarations. How Commercial Property Insurance Works Commercial property insurance covers property your business owns and uses in its operations....

Acronym: COF The cost of funds is indexed (also known as the Cost of Funds Index or COFI) and published by Freddie Mac for each month. In October 2021, the COFI hit 0.752, which was the lowest since tracking began in 1976. How Does the Cost of Funds Work? Banks use the cost of funds to determine how much to charge their customers. The cost of funds isn’t a static number; it shifts based on the moves the Federal Reserve makes to regulate the economy, including buying or selling bonds to increase or decrease banks’ liquidity and changing the reserve requirement....