To see how it is used in a simple illustration, consider that you have a stock worth $45 and a call option on that stock is worth $3. Further assume that the delta is 0.4. This indicates that the value of the option is expected to rise by 40 cents for every $1 increase in the price of the stock. Using that formula, if the price of the stock rises to $46, then the price of the call option is expected to rise to $3....
After looking at the risk involved, the insurance underwriter sets the insurance premium that will be charged in exchange for taking on this risk. How do companies decide what is an acceptable level of risk? That’s where underwriting comes in. Underwriting is a complex process that involves data, statistics, and guidelines provided by actuaries. All of this work helps underwriters predict the likelihood of most risks. Then, insurance companies can charge premiums based on the level of risk....
Homeowners liability insurance, for example, helps protect you if someone is injured on your property and decides to sue you for damages. Your liability coverage protects you from financial losses by covering the costs of the lawsuit and any legal judgments against you. How Liability Insurance Works Liability protection is one of the most important types of insurance coverage. It’s designed to protect you from the cost of lawsuits and legal liability if your negligence causes harm to another person....
Alternate name: minority interest Non-controlling interests are important when it comes to businesses that own subsidiary companies, such as holding companies. These parent businesses own enough shares in their subsidiaries to exercise control over them, but they may not own 100% of the shares in their subsidiaries. Parent companies have to note non-controlling interest in their subsidiaries on their balance sheets under stockholder equity. One real-world example of non-controlling interests involves Warren Buffet’s company, Berkshire Hathaway....
Alternate name: Life qualityAcronym: QOL For example, Sarah enjoys her job and earns a salary that provides plenty of disposable income, which she uses to go on vacations and pursue a variety of hobbies. She spends her weekends volunteering in her community, working on projects around her house, or relaxing with her friends and family. When asked, Sarah might report a high quality of life because overall she feels fulfilled and happy....
Definition and Example of Risk Tolerance All investments carry some degree of risk. The amount of market risk you can stand is your risk tolerance. In simple terms, it is how much you are willing to be unsure about (and how much money you’re willing to lose), in the face of possible gains. For example, if you’re unwilling to lose much, or any, of your capital, you’d have a very low tolerance for risk....
For instance, let’s say Joe, Kim, and Steve buy a property as friends and set up an agreement to be tenants in common. Joe owns 25%, Kim owns 25%, and Steve owns 50%, but they all can use the entire property. Five years after their initial agreement, Joe decides to sell his share of the property to Kim. Now, Kim and Steve own equal 50% shares of the property....
Learn what FICA is, why you have to pay it, and the differences between FICA and income taxes. How the FICA Tax Works The FICA tax, also commonly called payroll or withholding tax, is money collected from you and your employer to pay for services such as old age, survivors, and disability insurance (OASDI). It also covers Medicare. Alternate name: Withholding or payroll taxAcronym: FICA A Brief History of FICA Tax Driven by the suffering of the Great Depression, the FICA tax was originally created to fund an “old age” Social Security system....
While gold was minted into coins and used for trading afterward, the precious metal did not become a standard until the 19th century. Britain used gold as a standard as early as 1816, but it was not until the 1870s that gold became an international standard for valuing currency. The United States adopted the gold standard in 1879 after several attempts to use various exchange methods failed. The Gold Standard Act of 1900 established gold as the only metal for redeeming paper currency in the U....
For example, while you can sign a paper to have specific medical information released to other entities, your information can’t be released without your express written consent. Most health care providers and health insurers are required to comply with the privacy rules of the HIPAA law. This includes protecting any personal health information (PHI) and individually identifiable health information. How the HIPAA Law and Privacy Rule Works HIPAA Privacy and Security Rules have been in place to protect your private health care data since 1996....
For example, you might own an asset that produces $50,000 in investment income annually. If you fell into the 37% marginal tax bracket, you would have to pay $18,500 or 37% of that money in tax to the IRS if you were to report it on your own tax return. Now, if your child had no other income, their tax bracket for $50,000 may be 22%. Your child would therefore hypothetically pay only $11,000 in taxes (22% of $50,000) if you transferred ownership to them....
From oversharing the details of your job search to making a typo in a cover letter, here’s what not to do when you apply for a job. What Not to Do When Applying for a Job Submit a Job Application, Resume, or Cover Letter with Typos Check your resume, cover letter, and every single email you send for grammar and spelling — even if it’s just a quick email, LinkedIn message, or Facebook message to a networking contact....
Here are some questions to consider that may help you decide which business type to use. Types of Business Structures The process of establishing a business depends on the type of structure you choose. Some types of simple establishment processes. Others will take more time, effort, and money. Here are some of the most common types to consider. Sole Proprietorship To start a sole proprietorship, all you need is a business license for your city, possibly a “fictitious name” statement, and a business checking account....
Here are some steps to take when you make a mistake at work and want to try to correct it. Admit Your Mistake As soon as you discover that something went awry, immediately tell your boss. Don’t try to hide your mistake. If you do that, you can end up looking a lot worse, and others could even accuse you of a coverup. Being upfront about it will demonstrate professionalism, a trait most employers greatly value....
A government shutdown can result when there’s a disagreement regarding the budget. Only services that are deemed essential, such as Social Security and Medicare, are allowed to continue during a shutdown until new funding legislation is signed into law. But taxpayers’ obligations are largely unaffected. The Appropriations Subcommittees The 12 Appropriations subcommittees that rely on Congress to pass budget legislation are: Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related AgenciesSubcommittee on Commerce, Justice, Science, and Related AgenciesSubcommittee on Department of DefenseSubcommittee on Department of Homeland SecuritySubcommittee on Department of the Interior, Environment, and Related AgenciesSubcommittee on Departments of Labor, Health and Human Services, Education, and Related AgenciesSubcommittee on Energy and Water DevelopmentSubcommittee on Financial Services and General GovernmentSubcommittee on Legislative BranchSubcommittee on Military Construction and Veterans Affairs, and Related AgenciesSubcommittee on State, Foreign Operations, and Related ProgramsSubcommittee on Transportation, Housing and Urban Development, and Related Agencies...
Through NAFTA, the three signatories agreed to remove trade barriers between them. By eliminating tariffs, NAFTA increased investment opportunities. Acronym: NAFTA How the North American Free Trade Agreement (NAFTA) Worked NAFTA accomplished six distinct things for the participating countries. First, NAFTA granted most-favored-nation status to all co-signers. That meant each country treated the other two fairly and couldn’t give better treatment to domestic investors than to foreign ones. They also couldn’t offer a better deal to investors from non-NAFTA countries and had to offer federal contracts to businesses in all three NAFTA countries....
By asking a question like, “If you were hiring for this job, what would you be looking for in an applicant?” the interviewer is trying to determine what you think the job is all about. This type of interview question can be a test to see if you know what you are getting into and if you have done your research about the job. This question might seem tricky at first....
Registering and insuring your car in a state or city where you don’t live to save money is a fraud. However, you’ll need to discuss your specific case with an insurance agent or your insurance company directly to determine the best way to handle your coverage in other circumstances. Can a Car Be Insured in Another State? Insurance rates differ greatly from state to state. Sometimes they vary greatly within a state....
Young drivers usually pay more for car insurance than more-experienced drivers. Often, rates decrease by the time they reach age 25. But age is not the only factor auto insurance providers use when setting drivers’ insurance rates. Even before reaching 25, young drivers can employ other methods to reduce their rates, such as taking a driver training course and maintaining good academic grades. Knowing what’s available to you can help you lessen your auto insurance bill....
Even if you trust your bank, it’s wise to keep your own records, because you might be better informed than your bank about upcoming transactions. What Is a Check Register? A check register is a list of transactions in your bank account, along with a running balance that tells you how much money you have available to spend. You can use paper, apps, or spreadsheets to keep these records. As you spend money or add funds to your account, you update the list....
