What is Marginal Utility? Marginal utility refers to the additional benefit derived from consuming one more unit of a specific good or service. Consuming units can result in positive, negative, or zero marginal utility. Utility is not constant, and for every additional unit consumed, often the consumer experiences what economists refer to as the diminishing…
What are Reporting Covenants? A covenant is a contractual condition between a lender and a borrower to protect both parties from an unexpected event that could lead to a borrower defaulting on their obligations. Covenants are also legally binding, which means that breaking a covenant could result in a default, financial penalties or forced early…
What is Step-up in Basis? Step-up in basis is an IRS tax rule used to adjust an inherited asset’s value to conform to its fair market value for tax purposes upon the decedent’s death. The step-up in basis rule reduces the capital gains tax burden on the inherited property. The value of the property immediately…
What are Statutory Reserves? A statutory reserve is a legal requirement for insurance companies to hold a certain amount of funds in reserves to protect policyholders’ future benefits and ensure that the insurers are financially healthy. Insurance companies are bound by law to hold a certain fraction of their assets as either cash or assets…
What is a Startup? A startup is a company in the early stages of development that is set up by one or several people to enter an existing market with unique products or services. Startup companies often face insufficient capital to fund their business operations to be at the same level as already established companies….
What is Seller Financing? In very general terms, seller financing can be described as a loan provided by a seller to a buyer. In real estate, seller financing is also called “owner financing” or “bond-for-title.” In such cases, the buyer signs a mortgage agreement with the seller, and the seller handles the process. Such a…
What is the New Growth Theory (NGT)? The New Growth Theory – sometimes referred to as the NGT – is a fresh take on the drivers behind economic prosperity and growth. The NGT suggests that the productivity and growth of the economy are tied directly to people – more specifically, to what they want and…
What is a Hot Wallet? A hot wallet refers to a virtual currency wallet that is accessible online, and it facilitates cryptocurrency transactions between the owner and end-users. A collection of private keys stored on a program connected to the internet is used to store and send different currencies such as Bitcoin. By storing and…
What is a Margin Account? A margin account refers to a type of brokerage account that investors use where they can borrow funds to purchase financial products. Investors are required to pay a monthly interest rate on the amount borrowed from the brokerage. A margin-approved account increases the customer’s power to purchase more securities, such…
What is a Stalking-Horse Bid? In bankruptcy cases, a stalking-horse bid refers to a deal with a potential buyer that is hidden from the public, creditors, and the courts. Usually, when a company is preparing to file bankruptcy, it chooses an entity from a pool of interested bidders to make the first bid to buy…
