What is a Floating Charge? A floating charge (or floating lien) gives a lender a broad legal interest over a pool of assets owned by a business and which serve as collateral to secure debt. It matches operating debt to assets that change, often current assets. Unlike a fixed charge, a floating charge does not…
What is the Four Percent Rule? The Four Percent Rule is known as the percentage amount a retiree should withdraw from their retirement account per year. It is meant to be a benchmark that provides individuals with a steady set stream of income while allowing the invested balance to continue to grow throughout retirement. Understanding…
Who is Kenneth Arrow? Kenneth Arrow was an economist who won the Nobel Memorial Prize in Economic Sciences in 1972. He was known for his contribution to equilibrium analysis and welfare economics. He also explored social choice theory, endogenous growth theory, collective decision-making, the economics of information, and economics of racial discrimination. …
What are Hard Skills? Hard skills are technical or learned abilities that are developed and refined through practice and repetition. Hard skills are crucial for the job, as they increase productivity, efficiency, and ultimately can complete the job in a satisfactory manner. However, it is important to understand that hard skills do not ensure success,…
What is a Forward Market? A forward market is a marketplace that offers financial instruments that are priced in advance for future delivery. It tends to be referenced as the foreign exchange market, but it can also apply to securities, commodities, and interest rates. How a Forward Market Works Forward markets create forward contracts. The…
What is a Fractional Share? A fractional share is when a full single share is split. For example, fractional shares occur during stock splits, dividend reinvestment plans, or various other actions that may result in a partial share of ownership. Generally speaking, the stock market does not offer partial shares, and while some do, it…
What is Franchise Tax? A franchise tax, also known as a privilege tax, is a tax paid by certain companies that wish to conduct business in specific states. It gives businesses the ability to be chartered and to operate within the said state. Nonetheless, a franchise tax is different from a tax given to franchises,…
What is a Franchisee? A franchisee is a business that operates under an existing business’s trademarks. They purchase the right to use a parent company’s brands, material, and other knowledge to sell the same goods and operate under the same standard as the original business. Franchisees become independent operators and owners of franchises, which are…
What is a Deferred Profit Sharing Plan (DPSP)? A Deferred Profit Sharing Plan (DPSP) is a compensation plan wherein employers share a part of their profits with employees. Under the DPSP scheme, employees are entitled to get a share of the profits of the company. However, the amount thus received is not immediately given to…
What is a Deficit? The literal meaning of the word deficit is a loss or shortfall. In terms of finance, deficit refers to a shortfall of certain economic resources, mostly money. An individual runs a deficit if they spend more money than what they earn in a month. When a government spends more money than…
