What is Notching? Notching is a general practice by credit rating agencies to compare ratings of different issuers across a single class of obligations or closely related entities. A comparison of the ratings of different companies is used to reflect the credit-specific risks. Liabilities can be notched lower or higher because of the varying degree…
What is a Greenfield Investment? In economics, a greenfield investment (GI) refers to a type of foreign direct investment (FDI) where a company establishes operations in a foreign country. In a greenfield investment, the company constructs new (“green”) facilities (sales office, manufacturing facility, etc.) cross-border from the ground up. According to the Bureau of Economic…
What is the Variable Prepaid Forward Contract? A variable prepaid forward contract is a technique that stockholders use in market equity transactions to cash in some of their stock to defer the tax liability owed on the capital gains. The contract opens transactions and relates to future commitment, making it synonymous with stock options. Investors…
What is a Brownfield Investment? In economics, a brownfield investment (BI) is a type of foreign direct investment (FDI) where a company invests in an existing facility to start its operations in the foreign country. In other words, a brownfield investment is the lease or purchase of a pre-existing facility in a foreign country. Understanding…
What is Vandalism and Malicious Mischief Insurance (VMM)? Vandalism and malicious mischief insurance (VMM) is a type of property insurance that covers damages to parts of an insured building or personal property for which the policyholder is responsible. VMM insurance is ideal for buildings that remain unoccupied for an extended period and is suitable for…
What is an Entity? An entity is an organization created by one or more individuals to carry out the functions of a business, and that maintains a separate legal existence for tax purposes. It can be created at the local or state level. Entities refer to the structure of the business rather than what the…
What is Valued Policy Law (VPL)? The valued policy law (VPL) is a law that facilitates prompt payment of claims when an insured event occurs. The law requires that the insurance company pays the full value of a policy to the policyholder when an insured event results in a total loss. Usually, it reimburses the…
What are the Types of Businesses? There are different types of businesses to choose from when forming a company, each with its own legal structure and rules. Typically, there are four main types of businesses: Sole Proprietorships, Partnerships, Limited Liability Companies (LLC), and Corporations. Before creating a business, entrepreneurs should carefully consider which type of…
What Is Organizational Development? Organizational development can be defined as an objective-based methodology used to initiate a change of systems in an entity. Organizational development is achieved through a shift in communication processes or their supporting structure. Studying the behavior of employees enables professionals to examine and observe the work environment and anticipate change, which…
What is a Partnership? An unincorporated business structure that two or more parties form and own together is called a partnership. These parties, called partners, may be individuals, corporations, other partnerships, or other legal entities. Partners may contribute capital, labor, skills, and experience to the business. They may have unlimited legal liability for the actions…
