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when an examination results in a proposed tax deficiency the first step the irs takes towards amending this deficiency is to issue a 30 day letter to the taxpayer it is known as a 30 day letter because the taxpayer has 30 days to respond before the irs processes the changes made to the return
a notice of deficiency explains any adjustments and how the amount of any deficiency was calculated it explains the taxpayer s options to either agree to the additional tax liability by signing a waiver form 40893 or challenge it in u s tax court 21a notice of deficiency is sometimes referred to as a 90 day letter beca...
what is a notice of termination
a notice of termination is what an employer uses to notify an employee as to the end of their employment contract more broadly it may also refer to the formal notification of the end of a contract between two or more parties while a notice of termination usually is provided to an employee for reasons unrelated to their...
how a notice of termination works
in the united states employers are not required to give notice to a worker prior to their termination as per the fair labor standards act flsa all american workers are considered at will which means that an employer can terminate employees for any reason without establishing just cause as long as the reason is not ille...
how a notice of termination works in other countries
in some countries an individual who has been employed for a certain period of time must be provided with a notice of termination for example in canada workers who have been employed with a company continuously for three or more months must be given written notice of termination by their employer along with termination ...
how long a notice period depends on the length of service a notice of termination is not due however to an employee who is guilty of disobedience willful misconduct or neglect of duty
special considerations
when a party to a contract wants to notify another party or parties of their intent to end their relationship as well as disclose a date for contract expiration they will send a notice of termination simply put it is a formal declaration to another party that you plan to end a contract it acts as a public record of suc...
such a notice will contain the terms that permit the termination of an agreement a notice of termination also called a notice of cancellation of contract or contract termination letter serves as a courtesy to other parties and can help preserve relationships
what is a notice to creditors
a notice to creditors can be a specific contact with a known creditor or a public notice commonly posted in a local newspaper by a trust or estate s executor as part of the probate of the estate of a decedent the notice serves as the official notification to creditors and debtors of the probate of a deceased individual...
how a notice to creditors works
in the united states when a person dies there may be an informal probate process of the deceased s estate the phrase avoiding probate refers to the strategy of arranging for the non probate transfer of assets via trusts joint accounts or by other means such as life insurance some states have an asset threshold allowing...
what is notional principal amount
the term notional principal amount refers to the predetermined dollar amount or principal on which exchanged interest payments are based notional principal amounts are commonly used between two parties in interest rate swaps the notional principal amount is a theoretical value this means while it is predetermined by pa...
when calculating bond payments a bond s face value is considered notional when it comes to determining the interest due the payments are a percentage of the face value even if the face value is not available in a true sense the face value cannot be withdrawn and may not even exist in a traditional sense until the bond ...
interest rate swaps usually involve the exchange of a fixed interest rate for a floating rate or vice versa to reduce or increase exposure to fluctuations in interest rates or to obtain a marginally lower interest rate than would have been possible without the swap special considerationsan interest rate swap involves t...
how do interest rate swaps work
an interest rate swap is a financial agreement between two parties it is a forward contract which means both parties pay each other interest at specified intervals in the future these swaps are based on a predetermined dollar value called the notional principal amount this value is theoretical which means that it never...
what does notional value mean in finance
the term notional value is used to define the total value of an underlying asset in a financial contract put simply it is the face value of a contract s underlying asset this value can be applied to different types of financial contracts including interest rate swaps equity options and foreign currency derivatives trad...
when you trade interest rates you re essentially betting on whether rates will move up or down if you re an experienced trader consider investing in interest rate futures these financial contracts are a little more complicated than the average security and often involve spread betting to speculate on the movement of in...
but if you re a novice investor or not that experienced you can still take advantage of interest rate investing consider etfs that are designed to move with increases in long term interest rates fixed income securities or index investing that mirrors interest rates the bottom linean interest rate swap is a unique type ...
what is notional value
notional value is a term often used by derivatives traders to refer to the total value of the underlying asset in a contract it can be the total value of a position how much value a position controls or an agreed upon amount in a contract put simply it is the face value that is used to determine payments on a financial...
why is notional value important
the notional value is the amount of an underlying asset that investment managers might seek to hedge against in contrast the market value will fluctuate over time based on market movements which the investor might presumably seek to hedge while the notional amount remains the same
what is the difference between notional and market value
notional value refers to the value of the underlying asset say 5 000 worth of stock bought on the open market it s also known as the face value of a holding market value is what the current position is worth in the open market
is notional value the same as face value
yes it is the notional value or face value that investors may seek to hedge against as it represents the full value of the underlying asset
what value should an investor target to hedge against an asset exposure
investors should focus on the notional or face value to hedge against exposure to an asset for instance say a portfolio manager has 10 million invested in 10 year u s government bonds the manager likely would want to use options and the leverage they provide to cover the entire notional value of the investment in this ...
what is the effective notional amount of an investment
the effective notional amount is the face value minus the cost of any hedges that have been purchased against it for example an investor seeks to hedge against a long 10 000 stock position in xyz by buying an out of the money put which costs 2 50 per 100 shares or 250 in premium to cover the full 10 000 investment inco...
what is novation
novation is the replacement of one of the parties in an agreement between two parties with the consent of all three parties involved to novate is to replace an old obligation with a new one for example a supplier who wants to relinquish a business customer might find another source for the customer if all three agree t...
how novation works
in legal language novation is a transfer of both the benefits and the burdens of a contract to another party contract benefits may be anything for example the benefit could be payments for services the burdens are the obligations taken on to earn the payment in this example the services one party to the contract is wil...
what is a novation
in novation one party in a two party agreement gives up all rights and obligations outlined in a contract to a third party as a result the original contract is canceled
what is the meaning of novation agreement
in novation the rights and obligations of one party to a two party contract are transferred to a third party with the agreement of all three parties
is novation a new contract
yes because the old contract is invalidated or extinguished when the new contract is signed the bottom linein a novation when all parties agree one party in a two party agreement gives up all rights and obligations outlined in a contract to a third party as a result the original contract is canceled novation differs fr...
what is a null hypothesis
a null hypothesis is a type of statistical hypothesis that proposes that no statistical significance exists in a set of given observations hypothesis testing is used to assess the credibility of a hypothesis by using sample data sometimes referred to simply as the null it is represented as h0 the null hypothesis also k...
how null hypothesis testing is used in investments
as an example related to financial markets assume alice sees that her investment strategy produces higher average returns than simply buying and holding a stock the null hypothesis states that there is no difference between the two average returns and alice is inclined to believe this until she can conclude contradicto...
how is the null hypothesis identified
the analyst or researcher establishes a null hypothesis based on the research question or problem they are trying to answer depending on the question the null may be identified differently for example if the question is simply whether an effect exists e g does x influence y the null hypothesis could be h0 x 0 if the qu...
how is null hypothesis used in finance
in finance a null hypothesis is used in quantitative analysis it tests the premise of an investing strategy the markets or an economy to determine if it is true or false for instance an analyst may want to see if two stocks abc and xyz are closely correlated the null hypothesis would be abc xyz
how are statistical hypotheses tested
statistical hypotheses are tested by a four step process the first is for the analyst to state the two hypotheses so that only one can be right the second is to formulate an analysis plan which outlines how the data will be evaluated the third is to carry out the plan and physically analyze the sample data the fourth a...
what is an alternative hypothesis
an alternative hypothesis is a direct contradiction of a null hypothesis this means that if one of the two hypotheses is true the other is false the bottom linea null hypothesis states there is no difference between groups or relationship between variables it is a type of statistical hypothesis and proposes that no sta...
what is numeraire
numeraire is an economic term of french origin which acts as a benchmark in comparing the value of similar products or financial instruments the word numeraire translates as money coinage or face value understanding numerairenumeraire is an economic term that represents a unit in which prices are measured a numeraire i...
what is numismatics
numismatics is the study of the physical embodiment of various payment media i e currencies the study of numismatics as it applies to coins is often in the research of the production and use of the coins to determine their rarity understanding numismaticsnumismatics differs from historical and economic studies of money...
how to become a numismatist
a numismatist also known as a coin grader is a professional who collects analysis and assesses the quality of collectible coins currency and other like objects in the united states prospective numismatists must join the american numismatic association ana complete prescribed courses and pass an exam the numismatist pro...
what is numismatic gold
numismatic gold refers to collectible gold coins that hold more value than the spot or current market price of gold the increased value is largely due to rarity age and other factors
what does numismatic value mean
numismatic value is the value a seller receives for the sale of a collectible coin this value is determined by the coin s quality rarity and demand who has the biggest coin collection the smithsonian national numismatic collection is revered as the biggest coin collection in the united states and thought to be the larg...
what is an n v
the term n v refers to an acronym for the dutch phrase naamloze vennootschap an n v is a public limited liability company or an open corporation that sells shares to the public in order to generate income the acronym appears after the company name the same way american and british company names precede the words inc or...
how an n v works
every country has different regulations that outline the process involved with setting up a corporation this includes rules about registration taxation and corporate structures there are certain procedures that companies must abide by in order to go public regardless of the country in which they do business as noted ab...
what are the differences between an n v and b v
there are several things that set an n v apart from a b v namely their structures sizes and minimum requirements an n v is a public limited company while a b v is a private limited company an n v is reserved for larger entities and they require a greater minimum startup capital requirement of at least 45 000 compared t...
what does n v stand for
n v stands for naamloze vennootschap which is a public limited company in the netherlands and other dutch influenced countries the term naamloze vennootschap translates to nameless venture
what are the characteristics of an n v
all corporations that fall under the n v category are legal entities that must be registered with authorities including those responsible for taxation this kind of company issues shares to shareholders for the purpose of raising capital shareholders are able to remain anonymous and have the power to make decisions abou...
what is nyse arca
nyse arca is an electronic securities exchange in the u s on which exchange traded products etps and equities are listed the exchange specializes in etp listings which include exchange traded funds etfs exchange traded notes etns and exchange traded vehicles etvs in addition to placing typical orders nyse arca allows i...
what is the difference between nyse and nyse arca
the new york stock exchange nyse is a physical and electronic stock exchange while nyse arca is an electronic communications network ecn used for matching orders
which stocks are on nyse arca
nyse arca lists more than 8 000 stocks and exchange traded products this means that virtually every individual stock and etf traded on a u s stock exchange will also be available to trade on nyse arca 17who owns nyse arca nyse arca was formed when the nyse acquired the archipelago ecn in 2006 the intercontinental excha...
what is the nyse composite index
the nyse composite index measures the performance of all common stocks listed on the new york stock exchange including american depositary receipts issued by foreign companies real estate investment trusts and tracking stocks the weights of the index constituents are calculated on the basis of their free float market c...
how the nyse composite index works
the new york stock exchange launched the composite index in 1966 it was relaunched in 2003 using a new methodology that is more in line with index methodology applied by popular broad based us indexes 1 ice data services is the index sponsor and administrator 1 securities industry automation corp maintained and calcula...
what is obamanomics
obamanomics describes the economic policies of the administration of former president barack obama with the term combining obama and economics the term is commonly associated with the tax policies healthcare reforms and economic stimulus programs enacted by the obama administration in response to the great recession of...
what is the obelisk consensus algorithm
obelisk is a blockchain consensus algorithm used by the skycoin ecosystem designed to eliminate the shortcomings of the proof of work pow and proof of stake pos algorithms according to its creators obelisk also reduces the need for mining significantly improves transaction speed and delivers enhanced security understan...
how is obelisk used
obelisk is used by the skycoin ecosystem skycoin is designed and advertised as an alternative to centralized internet control the intent behind the project is for consumers to control the internet by purchasing or building skyminer machines to run skywire the internet service provider isp alternative from their homes t...
what is a consensus node
in the skycoin network using obelisk consensus a consensus node collects blocks from block generating nodes and determines which block was made by the largest number of block generators that block is added to the blockchain
what is poa consensus
proof of authority consensus is a blockchain consensus mechanism where new blocks can only be created for the blockchain by nodes that have proven through authentication that they have the right to create a new block
how does blockchain reach consensus
many different consensus algorithms are designed to bring a distributed ledger to a consensus most are constructed to have many transaction validators reach a majority agreement about the state of the blockchain and the transactions taking place the bottom linethe skycoin blockchain uses the obelisk consensus algorithm...
what is objective probability
objective probability refers to the chances or the odds that an event will occur based on the analysis of concrete measures rather than hunches or guesswork each measure is a recorded observation a hard fact or part of a long history of collected data the probability estimate is computed using mathematical equations th...
what is obligation
an obligation is the responsibility of a party to meet the terms of a contract or agreement if an obligation is not met the legal system often provides recourse for the injured party understanding obligationobligations are the backbone of our economy trusting that a contract will be adhered to helps create a stable hea...
what is obligatory reinsurance
obligatory reinsurance is a treaty that requires an insurer to automatically send all policies on its books that fall within a set list of criteria to a reinsurer under the terms of an obligatory reinsurance agreement also called an automatic treaty the reinsurer is obliged to accept these policies understanding obliga...
what is an obligor
an obligor also known as a debtor is a person or entity who is legally or contractually obliged to provide a benefit or payment to another in a financial context the term obligor refers to a bond issuer who is contractually bound to make all principal repayments and interest payments on outstanding debt the recipient o...
is the borrower the obligor
in cases of debt the borrower or the one with the debt is the obligor they have an obligation to pay the lender or bond issuer or the obligee in other cases an obligor may not have a debt to an obligee but they may be responsible for paying them such as in cases of child support who is the obligor in a surety bond with...
when an obligor of child support dies they may still be responsible for paying child support through their estate depending on the laws of the state where they lived 5
the bottom lineunderstanding the difference between obligor and obligee will clarify financial responsibilities obligor s owe money to obligees whether it is due to debt or contractual obligations
what is obsolescence risk
obsolescence risk is the risk that a process product or technology used or produced by a company for profit will become obsolete and thus no longer competitive in the marketplace this would reduce the profitability of the company obsolescence risk is most significant for technology based companies or companies with pro...
what is obsolete inventory
obsolete inventory is a term that refers to inventory that is at the end of its product life cycle this inventory has not been sold or used for a long period of time and is not expected to be sold in the future this type of inventory has to be written down or written off and can cause large losses for a company obsolet...
when an expense account is debited this identifies that the money spent on the inventory now obsolete is an expense a contra asset account is reported on the balance sheet immediately below the asset account to which it relates and it reduces the net reported value of the asset account
examples of expense accounts include cost of goods sold inventory obsolescence accounts and loss on inventory write down a contra asset account may include an allowance for obsolete inventory and an obsolete inventory reserve when the inventory write down is small companies typically charge the cost of goods sold accou...
what is the occupancy rate
occupancy rate is the ratio of rented or used space to the total amount of available space analysts use occupancy rates when discussing senior housing hospitals bed and breakfasts hotels and rental units among other categories in a call center occupancy rate refers to the amount of time agents spend on calls compared t...
what is occupational labor mobility
occupational labor mobility refers to the ability of workers to switch career fields in order to find gainful employment or meet the needs of industry when conditions allow for high degrees of occupational labor mobility it can help maintain strong employment and productivity levels governments may provide occupational...
what is the occupational safety and health act
the occupational safety and health act is a law passed by the u s congress in 1970 to ensure safe workplace conditions around the country it established the federal occupational safety and health administration osha which sets and enforces workplace health and safety standards understanding the occupational safety and ...
what does osha do
the occupational safety and health administration osha acts as the enforcement arm of the occupational safety and health act although the legislation gave osha the authority to create industry specific guidelines it also outlined a general duty clause which applies to all employers in all industries this clause officia...
what is an occurrence policy
an occurrence policy covers claims made for injuries sustained during the life of an insurance policy under these types of contracts the insured party has the right to request compensation for damages that occurred within the timespan that the policy was active even if several years have since passed and the insurance ...
what is an ocean bill of lading
an ocean bill of lading is a document required for the transportation of goods overseas across international waters an ocean bill of lading serves as both the carrier s receipt to the shipper and as a collection document or an invoice the contract is a legally binding document between both the shipper and the carrier o...
how an ocean bill of lading works
an ocean bill of lading allows the shipper to move goods across international waters this document or contract provides the specifics involving the nature of the shipment including what and how much material is being transported along with where the goods will be shipped other information outlined in the contract inclu...
what is the october effect
the october effect refers to the belief that stocks tend to decline during the month of october it is considered to be more of a psychological expectation than an actual phenomenon as most statistics contradict the theory some investors may be nervous during october because some large historical market crashes occurred...
what is true about october is that it traditionally has been the most volatile month for stocks according to research from lpl financial there are more 1 or larger swings in october in the s p 500 than in any other month in history dating back to 1950
some of that can be attributed to the fact that october precedes elections in early november in the u s every other year 4september not october has more historical down markets however october also has had its fair share of record stock market crashes some of the events over the decades that have given october the repu...
is the october effect real
the data suggest that it isn t but some people seem to believe in it perhaps because many of the events that happened long ago such as the 1987 black monday crash were significant at the time because there is a psychological bias toward predicting a negative outcome for this month there is potential for some investors ...
are stocks usually down in october
no since 1928 stocks have on average risen in the month of october by more than 0 6 8
which has been the worst month for stocks historically
that depends on the time period you look at over the past century september has been the worst performing month for stocks losing around 1 on average 3the bottom linethe october effect is the belief that stocks fall on average during the month of october this supposed market anomaly has been cited in reflection of larg...
what is an odd lot
an odd lot is an order amount for a security that is less than the normal unit of trading for that particular asset odd lots are considered to be anything less than the standard 100 shares for stocks trading commissions for odd lots are generally higher on a percentage basis than those for standard lots since most brok...
what is the odd lot theory
the odd lot theory is a technical analysis hypothesis based on the assumption that the small individual investor is usually wrong and that individual investors are more likely to generate odd lot sales therefore if odd lot sales are up and small investors are selling a stock it is probably a good time to buy and when o...
what is odious debt
odious debt also known as illegitimate debt is when a country s government changes and the successor government does not want to pay debts incurred by the previous government usually successor governments argue that the previous government misappropriated money it had borrowed and that they should not be held responsib...
what is oex
oex which trades on the chicago board options exchange cboe is the ticker symbol used to identify standard poor s 100 index options understanding oexoex options were the original standard for index options trading on the domestic stock market over time options on the s p 500 spx passed them in popularity to the dismay ...
what is off balance sheet obs
off balance sheet obs items are assets or liabilities that do not appear on a company s balance sheet although not recorded on the balance sheet they are still assets and liabilities of the company investopedia jake shiunderstanding off balance sheet obs off balance sheet items are an important concern for investors wh...
how off balance sheet financing works
an operating lease used in off balance sheet financing obsf is a good example of a common off balance sheet item assume that a company has an established line of credit with a bank whose financial covenant condition stipulates that the company must maintain its debt to assets ratio below a specified level taking on add...
which accounts do not appear on the balance sheet
certain financial transactions do not appear on the balance sheet if they qualify as off balance sheet transactions these activities are intentionally left off of financial statements though they may cause a company s financial position to be misstated these occur based on the circumstances of the transaction i e a com...
is off balance sheet financing legal
it is legal but the information still must be included in the notes of financial statements per the sec and gaap requirements
what is an example of an off balance sheet item
leases are among the most common examples a company leasing an asset lists rent payments and other applicable fees but it does not list the asset and any corresponding liabilities some cases might involve a leaseback agreement in which a company leases an asset after selling that asset to its new owner
how do you recognize off balance sheet items
it s important to read any company s balance sheets closely including all notes when seeing common obs items such as leased items or partnerships with factors that handle accounts receivables it s a good idea to look especially closely the bottom lineassets or liabilities not included on a company s balance sheet are k...
what is off balance sheet financing obsf
the term off balance sheet obsf financing refers to an accounting practice that involves recording corporate assets or liabilities in such a way that doesn t make them appear on a company s balance sheet the practice is used to keep debt to equity d e and leverage ratios low especially if the inclusion of a large expen...
how does off balance sheet financing work
off balance sheet financing is an accounting strategy that companies use to move certain assets liabilities or transactions away from their balance sheets they may do this to attract more investors or when they have a lot of debt but need to borrow more capital to fund their operations companies with higher debt do thi...
how do you know that a company uses off balance sheet financing
companies are required to be transparent about their accounting practices and demand for more transparency from accounting and financial regulators is increasing for companies to be more forthcoming in the way they account for their financial situations this means they should include notes in all their financial report...
what happened with enron s balance sheets
enron was an american energy services and commodity company the corporation hid millions of dollars of debt and losses that it amassed from a series of failed projects and schemes from investors and analysts by using special purpose vehicles and special purpose entities these were all kept off the company s balance she...
what are off chain transactions cryptocurrency
off chain transactions refer to those transactions occurring on a cryptocurrency network that move the value outside of the blockchain due to their zero low cost off chain transactions are gaining popularity especially among large participants 1off chain transactions can be contrasted with on chain transactions underst...
what are off the run treasuries
off the run treasuries are all treasury bonds and notes issued before the most recently issued bond or note of a particular maturity off the run treasuries can be contrasted with on the run treasuries which refer to the newest issues only off the run treasuries explained
when the u s treasury issues securities treasury notes and bonds it does so through an auction process to determine the price at which these debt instruments will be offered based on the bids received and the level of interest shown for the security the u s treasury is able to set a price for its debt securities the ne...
for example if the u s treasury newly issued 5 year notes in february these notes are on the run and replace the previously issued 5 year notes which become off the run in march if another batch of 5 year bonds is issued these march notes are on the run treasuries and the february notes are now off the run and so on
where to trade off the run treasuries
while on the run treasuries are available to be purchased from treasury direct off the run securities can only be obtained from other investors through the secondary market when treasuries move to the secondary over the counter market they become less frequently traded as investors prefer to go for more liquid securiti...
what is an offensive competitive strategy
an offensive competitive strategy is a type of corporate strategy that consists of actively trying to pursue changes within the industry companies that go on the offensive generally make acquisitions and invest heavily in research and development r d and technology in an effort to stay ahead of the competition they wil...
what is an offer
an offer is a conditional proposal made by a buyer or seller to buy or sell an asset which becomes legally binding if accepted an offer is also defined as the act of offering something for sale or the submission of a bid to buy something
how offers work
an offer is a clear proposal to sell or buy a specific product or service under specific conditions offers are made in a manner that a reasonable person would understand acceptance and will result in a binding contract there are many different types of offers each of which has a distinct combination of features ranging...
when it comes to equity and debt offerings the offering price is the price at which publicly issued securities are offered for purchase by the investment bank underwriting the issue when startups decide to ipo or make their initial public offering this offer price is estimated to be at the sweet spot where there are bo...
similarly a tender offer is an offer to buy a company s stock or debt from existing stockholders and bondholders at a specified price and during a set period the term offer is also used to refer to the package an employer or company will make to a potential employee comprising of the full salary healthcare and benefits...
what is an offer in compromise
offer in compromise is a program instituted by the internal revenue service irs for taxpayers who cannot pay the taxes they owe or for taxpayers for whom it would create a financial hardship to pay the taxes they owe an offer in compromise allows taxpayers to settle their tax bill for less than the full amount owed 1
when considering whether to allow a taxpayer to settle his bill with an offer in compromise the irs will look at the taxpayer s unique circumstances including their income ability to pay expenses and any assets the taxpayers owes 1
understanding offer in compromiseoffers in compromise are only available to eligible taxpayers taxpayers can find out if they are eligible for this program by consulting the offer in compromise pre qualifier questionnaire online the questionnaire will ask whether you are in an open bankruptcy proceeding have filled out...
what is an offering
an offering is the issue or sale of a security by a company it is often used in reference to an initial public offering ipo when a company s stock is made available for purchase by the public but it can also be used in the context of a bond issue an offering is also known as a securities offering investment round or fu...
how an offering works
usually a company will make an offering of stocks or bonds to the public in an attempt to raise capital to invest in expansion or growth there are instances of companies offering stock or bonds because of liquidity issues i e not enough cash to pay the bills but investors should be wary of any offering of this type
when a company initiates the ipo process a very specific set of events occurs first an external ipo team is formed consisting of an underwriter lawyers certified public accountants cpas and securities and exchange commission sec experts next information regarding the company is compiled including financial performance ...
sometimes companies will issue what is known as a shelf prospectus detailing the terms of multiple types of securities that it expects to offer over the next several years the financial statements are then submitted for official audit and the company files its prospectus with the sec and sets a date for the offering ip...
what is an offering circular
an offering circular is a type of prospectus provided for a new security listing it is delivered to individuals and brokerage houses who are interested in potentially purchasing the newly issued securities it is often slightly abbreviated from the final long form prospectus but is still required to contain specific inf...