What is Early Exercise? Early exercise refers specifically to options contracts. The early exercise of an options contract refers to the process of buying and/or selling shares of a particular stock that include the underlying terms of a corresponding options contract before its expiration date. How It Works The underlying terms of an options contract…
What is a Direct Quote? A direct quote is an exchange rate quotation in the foreign exchange market. It quotes a fixed unit of a foreign currency against a variable amount of the domestic currency. In other words, a direct quote depicts the amount of foreign currency that can be bought for a certain unit…
What is the Direct Method? The direct method is one of the two methods used while preparing a cash flow statement. It is an accounting treatment that uses the actual cash inflows and outflows from the company’s operations. The direct method is also known as the income statement method. How is a Cash Flow Statement…
What is Delivered Ex Ship (DES)? Delivered Ex Ship (DES) was an Incoterms term/rule that basically required the seller to fulfill their delivery obligations by delivering the goods to the port specified by the buyer. The seller is responsible for the delivery and bears all risks and costs associated with it from the point of…
What is the Economic Value of Equity (EVE)? The economic value of equity (EVE) is a long-term economic measure/indicator of net cash flow. The EVE is calculated by taking into account the present value of all asset cash flows and subtracting the present value of all liability cash flows. In other words, it is the…
What are Unrestricted Net Assets? Unrestricted net assets are the asset (current and/or fixed) donations made to not-for-profit organizations (NPOs). The assets are “unrestricted” because they can be used for general expenditures or any other operational purpose(s), i.e., the donor didn’t specify where or how their donation(s) are to be used. Net Assets Classifications 1….
What is an Unsecured Note? An unsecured note is basically a debt instrument or a loan that is not secured (covered by collateral) by the assets of the issuer of the note. An unsecured note is typically a corporate debt obligation. In the spectrum of finance and investment, a note is primarily a legal financial…
What is Electronic Money? Electronic money refers to the currency electronically stored on electronic systems and digital databases, as opposed to physical paper and coin money, and is used to make it easier for users to transact electronically. The value of the electronic currency is backed by fiat currency. What is Fiat Currency (or Fiat…
What is the Economic Recovery Tax Act of 1981 (ERTA)? The Economic Recovery Tax Act of 1981 (ERTA) was a federal tax law passed on August 13, 1981 by the 97th U.S. Congress as a big move to encourage economic growth by providing crucial tax cuts. The legislation was also known as the “Kemp-Roth Tax…
What is a Flow-Through Entity? A flow-through entity – also known as a “pass-through entity” or “fiscally-transparent entity” – is a legal business entity where its profits flow directly to the investors/owners, and only the investors or owners are taxed on the income. The structure helps avoid double taxation, which is when an income from…
