What is a Valuation Reserve? A valuation reserve refers to the assets that life insurance companies set aside as a hedge against the decline in the asset’s value or unexpected market upheavals. The assets are allocated as per state law to protect the asset portfolio against devaluation risks. The existence of valuation…
What is Cumulative Voting? Cumulative voting, also called accumulation voting or weighted voting, is a multi-voting system used by companies to promote a more proportional representation for shareholders. In cumulative voting, each shareholder is entitled to one vote per share, multiplied by the number of available director positions, with the votes being distributed in whatever…
What is a Valoren Number? A valoren number is an identification number that is assigned to financial instruments such as stocks and bonds trading in Switzerland. The term “valor” is a Swiss-German term that means “security,” and it may include paper money and coins. Swiss people often use the terms “Valor Number” to refer to…
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…
