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what is financing | financing is the process of providing funds for business activities making purchases or investing financial institutions such as banks are in the business of providing capital to businesses consumers and investors to help them achieve their goals the use of financing is vital in any economic system as it allows compani... | |
is equity financing riskier than debt financing | equity financing comes with a risk premium because if a company goes bankrupt creditors are repaid in full before equity shareholders receive anything | |
why would a company want equity financing | raising capital through selling equity shares means that the company hands over some of its ownership to those investors equity financing is also typically more expensive than debt however with equity there is no debt that needs to be repaid and the firm does not need to allocate cash to making regular interest payment... | |
why would a company want debt financing | with debt either via loan or a bond the company has to make interest payments to creditors and ultimately return the balance of the loan however the company does not give up any ownership control to those lenders moreover debt financing is often cheaper due to a lower interest rate since the creditors can claim the fir... | |
what is a finder s fee | a finder s fee also known as referral income or referral fee is a payment made to an intermediary in or the facilitator of a transaction the finder s fee is rewarded because the intermediary discovered the deal and brought it to the attention of interested parties or the intermediary brought the interested parties toge... | |
when is a finder s fee paid | a finder s fee may be paid if someone plays a role in helping another person transact business | |
is a finder s fee legally binding | normally it is not unless a contract or legally binding agreement is made for a finder s fee to be paid between the person facilitating a sale and the person who wishes to make the sale | |
is a finder s fee always a monetary reward | no it isn t depending on the parties involved and the business transaction that closed the finder s fee could be a non monetary gift selected as a simple thank you the bottom linea finder s fee is some form of reward given to one party an intermediary who helps another party close a business transaction it can be finan... | |
what is finra brokercheck | finra brokercheck is a free online tool that helps individuals research brokers investment firms and financial advisers investors can obtain a variety of information including descriptions services offered credentials sanctions and registrations that may be helpful in the selection and vetting of an individual financia... | |
what information does finra brokercheck provide | for brokers currently registered with finra or at some time within the last 10 years finra brokercheck provides 1brokercheck provides information on investment firms including 1brokercheck does not contain any information that has not been disclosed to the crd system personal or confidential information or judgments or... | |
how often is brokercheck updated | registered brokers and brokerage firms are required to update their professional and disciplinary information in the central registration depository crd within 30 days and information is available in brokercheck the next business day 3 | |
what if my broker has complaints listed on brokercheck | brokers are required to notify finra of customer complaints that allege misconduct related to the sale of financial products even if the allegations are without merit it is advisable to consider how many complaints the broker has received over what period and whether the claim alleges specific acts of misconduct by the... | |
how can i request a brokercheck report | finra brokercheck reports are free via online phone fax and by mail finra will collect personal information only in those situations where a request is made that a brokercheck report is mailed 3 | |
what is fire insurance | fire insurance is a form of property insurance that covers damage and losses caused by fire most policies come with some form of fire protection but homeowners may be able to purchase additional coverage in case their property is lost or damaged because of fire purchasing additional fire coverage helps to cover the cos... | |
how fire insurance works | a standard homeowners insurance policy usually includes fire insurance homeowners insurance provides policyholders with coverage against loss and damage to their homes and possessions also referred to as insured property insured property includes the interior and exterior of the home and any assets kept on the property... | |
is fire insurance different from homeowners insurance | fire insurance provides coverage for costs related to a fire whereas homeowners insurance protects against many other types of risks a homeowners insurance policy typically includes coverage for damage caused by a fire but a stand alone fire insurance policy may provide more extensive coverage | |
what is not covered in fire insurance | a fire insurance policy will not cover losses related to fires set deliberately fire insurance also only covers losses related to a fire so if your property suffers loss or damage from another cause it would not be covered | |
what type of property is covered by fire insurance | typically any fire damage to your home or its contents will be covered by fire insurance this includes property covered by candle fires grease fires electrical fires and others 1the bottom linefor many homeowners protection provided by a standard homeowners insurance policy will be enough to cover fire related losses i... | |
what is a firm | a firm is a for profit business organization such as a corporation limited liability company llc or partnership that provides professional services most firms have just one location however a business firm consists of one or more physical establishments in which all fall under the same ownership and use the same employ... | |
when used in a title firm is typically associated with businesses that provide professional law and accounting services but the term may be used for a wide variety of businesses including finance consulting marketing and graphic design firms among others | theory of the firmin microeconomics the theory of the firm attempts to explain why firms exist why they operate and produce as they do and how they are structured the theory of the firm asserts that firms exist to maximize profits however this theory changes as the economic marketplace changes more modern theories woul... | |
why is a business sometimes called a firm | the word firm has latin roots to the word signature indicating the word may have historically been used to describe the name of a company in addition the etymology of the word translates back to a business or a name of a business 3 | |
what are the 4 types of firms | a firm may take a variety of legal structures including sole proprietorships partnerships corporations or cooperatives the rules dictating the operations and organizational structure of the company is often heavily dictated by the legal type of the firm | |
what is the purpose of a firm | though an oversimplification the purpose of a firm is to make money a nonprofit is often not referred to as a firm therefore a firm s purpose is to facilitate trade between a manufacturer or retailer with a client a firm s purpose is to ensure a good or service is transmit to those who need it with the expectation that... | |
what is a firm | a firm is a for profit business organization such as a corporation limited liability company llc or partnership that provides professional services most firms have just one location however a business firm consists of one or more physical establishments in which all fall under the same ownership and use the same employ... | |
when used in a title firm is typically associated with businesses that provide professional law and accounting services but the term may be used for a wide variety of businesses including finance consulting marketing and graphic design firms among others | theory of the firmin microeconomics the theory of the firm attempts to explain why firms exist why they operate and produce as they do and how they are structured the theory of the firm asserts that firms exist to maximize profits however this theory changes as the economic marketplace changes more modern theories woul... | |
why is a business sometimes called a firm | the word firm has latin roots to the word signature indicating the word may have historically been used to describe the name of a company in addition the etymology of the word translates back to a business or a name of a business 3 | |
what are the 4 types of firms | a firm may take a variety of legal structures including sole proprietorships partnerships corporations or cooperatives the rules dictating the operations and organizational structure of the company is often heavily dictated by the legal type of the firm | |
what is the purpose of a firm | though an oversimplification the purpose of a firm is to make money a nonprofit is often not referred to as a firm therefore a firm s purpose is to facilitate trade between a manufacturer or retailer with a client a firm s purpose is to ensure a good or service is transmit to those who need it with the expectation that... | |
what is a first mortgage | a first mortgage is a primary lien on a property 1 as the primary loan that pays for a property it has priority over all other liens or claims on a property in the event of default a first mortgage is not the mortgage on a borrower s first home it is the original mortgage taken on any one property it is also called a f... | |
when an individual wants to buy a property they may decide to finance the purchase with a loan from a lending institution called a mortgage the lender expects the home loan or mortgage to be repaid in monthly installments which include a portion of the principal and interest payments the lender will have a lien on the ... | the first mortgage is the original loan taken out on a property the homebuyer could have multiple properties in their name however the original mortgages taken out to secure each of the properties comprise the first mortgage for example if a property owner takes out a mortgage for each of their three homes then each of... | |
is a second mortgage superior to a first mortgage | first mortgages take precedence over second mortgages for repayment if the borrower defaults this means that second mortgages are subordinate not superior to first mortgages on a home | |
what is the downside to a second mortgage | second mortgages increase a homeowner s monthly financial obligations they can also increase the risk of default if the homeowner is unable to keep up with both the first and second mortgage payments | |
is taking out a second mortgage a good idea | taking out a second mortgage could be a good idea if you ve researched borrowing options and you understand what you can afford to repay if however your income is unstable or you lack sufficient emergency savings to cover mortgage payments if you lose your job or become ill and can t work then you may want to reconside... | |
what is a first mover | a first mover is a service or product that gains a competitive advantage by being the first to market with a product or service being first typically enables a company to establish strong brand recognition and customer loyalty before competitors enter the arena other advantages include additional time to perfect its pr... | |
how a first notice of loss works | the first notice of loss fnol is a report that starts the process for you to receive a claim settlement for example if a thief steals your automobile and you carry comprehensive insurance you can file a claim against your policy to help pay for a new ride the first step in the claims process is to contact your insuranc... | |
what is required for an fnol | it s important to file the fnol as soon as possible but you need to prepare first before contacting the insurance company you first need to document your loss 5 for instance if a fire damages your kitchen take photos or videos of the damage if you have photos or videos of the insured asset taken before the incident mak... | |
when making an fnol by phone ask the agent or representative about the next steps in the process and whether they need additional documentation or information from you or other parties take notes during the call | outcomes following the fnolafter the fnol the insurance company might send a claims adjuster to inspect your losses 5 it s the adjuster s job to determine the extent of losses and how much you will receive in a settlement it s important for you to be available during the adjuster s visit particularly if you were presen... | |
when a loss occurs contact your insurer as soon as possible if you intend to file a claim the quicker you report a loss the faster you ll receive a settlement payment some insurance companies recommend or require a fnol within a certain period for example a provider might recommend submitting a homeowners claim within ... | be aware that your claims history is one factor insurance companies use when setting rates filing a single claim might not cause a rate increase for instance you might not face a rate increase following a storm damage claim however if you file an auto collision insurance claim for an accident deemed your fault you ll l... | |
what is an example of a first notice of loss | let s say you crash your car into a tree for your collision insurance to pay for the damage you ll need to first file a claim insurance companies offer several ways to file a claim which can vary by carrier regardless of how you make the initial contact about the accident and losses this first contact constitutes the f... | |
what is the difference between proof of loss and loss notice | the fnol loss notice is your first step in the claims process when a disaster occurs you must report losses to an insurance agent or company to start the claims process proof of loss is a later step in which you must provide details of the scope of the loss along with an explanation of losses the adjuster might require... | |
what is the first world | first world a term developed during the cold war in the 1950s originally referred to a country that was aligned with the united states and other western nations in opposition to what was then the soviet union and its allies since the collapse of the soviet union in 1991 the term s meaning has largely evolved currently... | |
what is the first world | while highly subjective first world is a term that consists of countries that may have the following characteristics stable democracies high standards of living capitalist economies and economic stability other measures that may be used to indicate first world countries include gross domestic product gdp or literacy ra... | |
what defines a first world country | there is no universal way to define a first world country they are often characterized as industrialized and democratic nations these features are typically accompanied by stable currencies sound financial markets and modern infrastructure due to these factors first world countries often attract foreign direct investme... | |
why is the term first world contentious | first world is a problematic term because it is outdated first coined during the cold war it referred to countries that were allies of the united states mostly other westernized countries as opposed to countries that aligned with the former soviet union because the economic indicators used to define the first world va... | |
what is a fiscal deficit | a fiscal deficit is a shortfall in a government s income compared with its spending a government that has a fiscal deficit is spending beyond its means a fiscal deficit is calculated as a percentage of gross domestic product gdp or simply as total dollars spent in excess of income in either case the income figure inclu... | |
what is the fiscal multiplier | the fiscal multiplier measures the effect that increases in fiscal spending will have on a nation s economic output or gross domestic product gdp in general economists define fiscal multipliers as the ratio of a change in output to a change in tax revenue or government spending fiscal multipliers are important because ... | |
what is fiscal policy | fiscal policy refers to the use of government spending and tax policies to influence economic conditions especially macroeconomic conditions these include aggregate demand for goods and services employment inflation and economic growth during a recession the government may lower tax rates or increase spending to encour... | |
when private sector spending decreases the government can spend more or tax less in order to directly increase aggregate demand when the private sector is overly optimistic and spends too much too quickly on consumption and new investment projects the government can spend less or tax more in order to decrease aggregate... | this means that to help stabilize the economy the government should run large budget deficits during economic downturns and run budget surpluses when the economy is growing these are known as expansionary or contractionary fiscal policies respectively during the great depression of the 1930s u s unemployment rose to 25... | |
where expansionary fiscal policy involves spending deficits contractionary fiscal policy is characterized by budget surpluses this policy is rarely used however as it is hugely unpopular politically | public policymakers thus face differing incentives relating to whether to engage in expansionary or contractionary fiscal policy therefore the preferred tool for reining in unsustainable growth is usually a contractionary monetary policy monetary policy involves the federal reserve raising interest rates and restrainin... | |
what are the main tools of fiscal policy | fiscal policy tools are used by governments to influence the economy these primarily include changes to levels of taxation and government spending to stimulate growth taxes are lowered and spending is increased this often involves borrowing by issuing government debt to cool down an overheating economy taxes may be rai... | |
how does fiscal policy affect people | often the effects of fiscal policy aren t felt equally by everyone depending on the political orientations and goals of the policymakers a tax cut could affect only the middle class which is typically the largest economic group in times of economic decline and rising taxation this same group may have to pay more taxes ... | |
should the government be getting involved with the economy | one of the biggest obstacles facing policymakers is deciding how much direct involvement the government should have in the economy and individuals economic lives indeed there have been various degrees of interference by the government over the history of the united states for the most part it is accepted that a certain... | |
what is a fiscal year fy | a fiscal year is a one year period that companies and governments use for financial planning and budgeting fiscal years are most commonly used by entities that depend on a cycle that doesn t correspond to the calendar year for example the u s government s fiscal year starts on oct 1 and ends on sep 30 it is structured ... | |
is a fiscal year the same as a calendar year | a fiscal year spans 12 months and corresponds with a company s budgeting process and financial reporting periods fiscal years can differ from a calendar year and are an important concern for accounting purposes because they are involved in federal tax filings budgeting and financial reporting requirements | |
what is an example of a fiscal year | the u s government s fiscal year begins on oct 1 and ends on sept 30 7 companies that rely on contracts from the government also may structure their fiscal years to end in late september conversely many tech companies experience strong sales volumes during the first half of the year which can explain why in many cases ... | |
why use a fiscal year instead of a calendar year | for companies that rely on seasonal activity using a fiscal year may be beneficial this is because it allows revenues expenses and plans to align better for instance it is common for retail companies to end their fiscal year on jan 31 after the holiday season has ended this ends the year on a high note gives the compan... | |
what is fiscal year end | the term fiscal year end refers to the completion of any one year or 12 month accounting period other than a typical calendar year a fiscal year is often the period used for calculating annual financial statements a company s fiscal year may differ from the calendar year and may not close on dec 31 due to the nature of... | |
what is the u s fiscal year end | the fiscal year of the u s government runs from oct 1 to sept 30 it is not the same as a calendar year 1 | |
what happens at the end of a fiscal year | at the end of a fiscal year a company reviews its entire annual bookkeeping it reconciles transactions makes adjustments verifies financial data and calculates all of the annual financial information such as income expenses revenue investments and more | |
how do companies choose their fiscal year end | most companies choose their fiscal year end based on the seasonality of their business some businesses are seasonal while others transact the same amount of business throughout the year businesses generally choose their fiscal year based on the period when they receive the most profit for example a business that earns ... | |
what is the fisher effect | the fisher effect is an economic theory created by economist irving fisher that describes the relationship between inflation and both real and nominal interest rates the fisher effect states that the real interest rate equals the nominal interest rate minus the expected inflation rate therefore real interest rates fall... | |
when a country has a higher nominal interest rate than a different country the first country s currency should see depreciation against the second currency as the first currency will also be experiencing a period of increased inflation | the international fisher effect ife the international fisher effect ife is an exchange rate model that extends the standard fisher effect and is used in forex trading and analysis it is based on present and future risk free nominal interest rates rather than pure inflation and it is used to predict and understand the p... | |
what are the main causes of inflation | there are many causes of inflation but some of the most common ones are when prices rise due to an increase in the cost of production for example if a company receives goods from a different country and the cost of oil rises those goods become more expensive because they now cost the company more to receive demand will... | |
how do you profit from inflation | there are two schools of thought when it comes to inflation those who beat inflation and those who simply match it looking to match inflation is possible as a retail investor by investing in asset classes that are more likely to do well during such periods two common classes are real estate and commodities a fixed mort... | |
how do you find the real interest rate | the real interest rate is essentially the nominal interest rate minus the inflation rate so if the nominal rate is 6 and inflation is 4 the real interest rate is 2 this interest rate can be calculated using currently available information but some businesses will plan for future interest rate and inflation environments... | |
what is the fisher transform indicator | the fisher transform indicator is a technical indicator that converts prices into a gaussian normal distribution it highlights when prices have moved to an extreme based on recent prices this may help in spotting turning points in the price of an asset it also helps show the trend and isolate the price waves within a t... | |
what is fitch ratings | fitch ratings is an international credit rating agency based in new york city and london investors use the company s ratings to determine which investments are less likely to default and yield a solid return fitch bases the ratings on several factors such as what kind of debt a company holds and its sensitivity to syst... | |
what are fitch ratings | fitch ratings are a system of creditworthiness ratings that gauge the ability of a country or business to pay off its debts | |
what does the fitch rating a mean | a rating of a means there is a low default risk and that a business or country is slightly more vulnerable to business or economic factors the plus symbol indicates that the entity s credit rating is higher than others given the a rating but not enough to warrant an upgrade to the aa rating 1 | |
what are moody s and fitch ratings | moody s and fitch ratings are two credit rating agencies that analyze how creditworthy a company is these ratings help investors make decisions about their investments both agencies provide sovereign credit ratings for countries to help international investors make investing decisions the bottom linefitch ratings is a ... | |
what are the 5 cs of credit | the five cs of credit is a system used by lenders to gauge the creditworthiness of potential borrowers the system weighs five characteristics of the borrower and conditions of the loan attempting to estimate the chance of default and consequently the risk of a financial loss for the lender the five cs of credit are cha... | |
what are the 5 cs of credit | the five cs of credit are character capacity collateral capital and conditions | |
why are the 5 cs important | lenders use the five cs to decide whether a loan applicant is eligible for credit and to determine related interest rates and credit limits they help determine the riskiness of a borrower or the likelihood that the loan s principal and interest will be repaid in a full and timely manner | |
which of the 5 cs is the most important | each of the five cs has its own value and each should be considered important some lenders may carry more weight for categories than others based on prevailing circumstances character and capacity are often most important for determining whether a lender will extend credit banks utilizing debt to income dti ratios hous... | |
which of the 5 cs refers to an individual s credit history | character refers to the composition of a borrower s financial history and financial health character incorporates a borrower s payment history credit score credit history and relationship with prior debtors | |
what are the principles of the 5 cs of credit that banks operate on | the main principle behind the five cs is to gauge the risk of extending credit to a borrower a lender needs to evaluate who they are lending money to why the borrower is asking for money and the likelihood of recovering loan proceeds another principle of the five cs is to determine how credit is priced borrowers with m... | |
what is the 5 year rule | the 5 year rule commonly refers to the withdrawal of funds from an individual retirement account ira but there are other types of 5 year rules learn more about the various definitions of a 5 year rule and how they may apply to you | |
how the 5 year rule works | you can withdraw contributions to a roth ira at any time however to withdraw earnings from your roth without owing taxes or penalties you have to have held the account for at least five years which is the 5 year rule old you must also be at least 59 the 5 year rule only limits when you can withdraw your earnings from y... | |
what is the 5 year rule for roth ira | the 5 year rule for roth iras states that you cannot withdraw the earnings from your roth ira account unless it has been five years since you first contributed to your account | |
what is the 5 year rule for inherited ira | the 5 year rule applies to taking distributions from an inherited ira to withdraw earnings from an inherited ira the account must have been opened for a minimum of five years at the time of death of the original account holder | |
does the roth 5 year rule apply for those aged 59 or older | yes the account must be five years old for earnings within a roth ira to be distributed without owing taxes or penalties even if you re already 59 years old | |
what is the 2 out of 5 year rule | the 2 out of 5 year rule states that homeowners must have lived in their home for two out of the last five years before the date of sale in order to avoid or reduce capital gains taxes on the appreciated value of the home the bottom linea 5 year rule can apply to a number of situations but is most commonly used when re... | |
what is a fixed annuity | a fixed annuity is a type of insurance contract that promises to pay the buyer a specific guaranteed interest rate on their contributions to the account by contrast a variable annuity pays interest that can fluctuate based on the performance of an investment portfolio chosen by the account s owner fixed annuities are o... | |
how a fixed annuity works | investors can buy a fixed annuity with either a lump sum of money or a series of payments over time the insurance company in turn guarantees that the account will earn a certain rate of interest this period is known as the accumulation phase | |
when the annuity owner or annuitant elects to begin receiving regular income from the annuity the insurance company calculates those payments based on the amount of money in the account the owner s age how long the payments are to continue and other factors this begins the payout phase the payout phase may continue for... | during the accumulation phase the account grows tax deferred then the account holder annuitizes the contract distributions are taxed based on an exclusion ratio this is the ratio of the account holder s premium payments to the amount accumulated in the account that is based on gains from the interest earned during the ... | |
how does an annuity work | an annuity has two phases the accumulation phase and the payout phase during the accumulation phase the investor pays the insurance company via a lump sum or periodic payments the payout phase by contrast is when the investor receives distributions from the annuity typically on a regular basis as income payouts are on ... | |
what is the difference between a retirement plan and an annuity | an annuity is an insurance contract whereas a retirement plan is not there are two main types of retirement plans defined contribution plans such as 401 k s and defined benefit plans which are also known as pensions an annuity s accumulation phase is similar to a defined contribution plan before retirement and an annui... | |
is an annuity a good idea | this depends on your goals and circumstances because annuities typically come with relatively high fees they should typically be considered only after you have taken advantage of other retirement savings vehicles for example you could max out your 401 k the internal revenue service irs raises the contribution limits ev... | |
what is a fixed asset | a fixed asset is a long term tangible property or equipment a company uses to operate its business fixed assets include buildings computer equipment software furniture land machinery and vehicles companies can depreciate the value of these assets to account for wear and tear fixed assets commonly appear on a company ba... | |
when a fixed asset reaches the end of its useful life it is usually disposed of by selling it for a salvage value this is the asset s estimated value if broken down and sold in parts in some cases the asset may become obsolete and will therefore be disposed of without receiving any payment in return the fixed asset is ... | some companies refer to their fixed assets as capital assets | |
what is an example of a company with fixed assets | if a company sells produce the delivery trucks it owns and uses are fixed assets if a business creates a company parking lot the parking lot is a fixed asset however personal vehicles used to get to work are not considered fixed assets additionally buying rock salt to melt ice in the parking lot is an expense | |
why should investors care about a company s fixed assets | information about a corporation s assets helps create accurate financial reporting business valuations and thorough financial analysis investors and creditors use these reports to determine a company s financial health and decide whether to buy shares or lend money to the business fixed assets are important to capital ... | |
what are other types of noncurrent assets | other noncurrent assets include long term investments and intangibles intangible assets can lack physical existence but can still be used long term these assets include goodwill copyrights trademarks and intellectual property | |
is a car a fixed asset | it depends on how the car is being used if the car is used in a company s operations to generate income such as a delivery vehicle it may be considered a fixed asset however if the car is used for personal use it is not considered a fixed asset and is not recorded on the company s balance sheet the bottom linea fixed a... | |
what is the fixed asset turnover ratio | the fixed asset turnover ratio fat is in general used by analysts to measure operating performance this efficiency ratio compares net sales income statement to fixed assets balance sheet and measures a company s ability to generate net sales from its fixed asset investments namely property plant and equipment pp e the ... | |
what is a good fixed asset turnover ratio | fixed asset turnover ratios widely vary by industry and company size therefore there is no single benchmark all companies can use as their target fixed asset turnover ratio instead companies should evaluate what the industry average is and what their competitor s fixed asset turnover ratios are a good fixed asset turno... | |
should the fixed asset turnover ratio be high or low | companies with higher fixed asset turnover ratios earn more money for every dollar they ve invested in fixed assets for most a higher fixed asset turnover ratio is better | |
what is the main downside to the fixed asset turnover ratio | the fixed asset turnover ratio does not incorporate any company expenses therefore the ratio fails to tell analysts whether or not a company is even profitable a company may be generating record levels of sales and efficiently using their fixed assets however the company may also have record levels of variable administ... | |
what is fixed capital | fixed capital includes the assets and capital investments such as property plant and equipment pp e that are needed to start up and conduct business even at a minimal stage these assets are considered fixed in that they are not consumed or destroyed during the actual production of a good or service but have a reusable ... | |
what is the fixed charge coverage ratio fccr | the fixed charge coverage ratio fccr measures a firm s ability to cover its fixed charges such as debt payments interest expenses and equipment lease expenses it shows how well a company s earnings can cover its fixed expenses banks will often look at this ratio when evaluating whether to lend money to a business candr... |
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