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how a ucc filing affects credit scores
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like individuals most businesses have a credit report and score while a ucc lien will appear on a business credit report it won t necessarily have an immediate negative impact on the business credit score unless the business should default on the underlying loan the loan attached to the ucc filing will also increase a business credit utilization ratio which if it gets too high can negatively impact the score furthermore the business won t be able to use the same piece of property as collateral for a different loan if there is a lien attached to it example of a ucc 1 statementsay a construction company named alex s excavation applies for a business loan to purchase two new hydraulic excavators bank xyz is interested in offering alex a loan and as part of the contract it files a ucc 1 shortly afterward alex s excavation loses one of its biggest construction contracts and then another and the company is forced to file for bankruptcy because the company had several lenders it s likely that bank xyz would not be given first order rights to alex s property and would have to wait until all other lenders were paid however because the bank filed a specific collateral lien on the two excavators it received the property cash mentioned in the ucc 1 statement in a timely fashion
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what are the benefits after filing a ucc uniform commercial code 1 ucc 1 statement
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filing a ucc 1 statement allows creditors to collateralize or secure their loan by utilizing the personal property assets of their customers in the event of a customer defaulting on their loan or filing for bankruptcy a ucc 1 elevates the lender s status to a secured creditor ensuring that it will be paid
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how do you remove a ucc filing
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while rules vary by state there are essentially two ways to remove a ucc lien
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how long does a ucc filing last
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a ucc 1 statement is effective for five years after this five year period the lien becomes null and void
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what is a continuation statement
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a continuation statement is an amendment attached to a ucc 1 financing statement continuation statements extend the lender s lien on the borrower s collateral past the original financing statement s expiration date when a lender files a continuation statement the continuation statement extends the ucc 1 financing statement by five years from the date of filing the bottom lineucc filings let creditors notify other creditors about a debtor s assets that are used as collateral for a secured transaction ucc liens filed with the appropriate secretary of state s offices serve as public notice of the creditor s interest in the assets 1 to check for ucc filings visit your secretary of state s website
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what is the ucla anderson school of management
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ucla anderson school of management is the graduate business school of the university of california at los angeles ucla founded in 1935 and located in los angeles california it is considered one of the most prestigious business schools in the united states 1the ucla anderson school of management is known for its master of business administration mba program which emphasizes early specialization and the generation of hands on experience for 2023 the ucla anderson school of management s full time mba program was rated as the 19th best program in the united states by u s news world report while its part time program ranked 5th 2anderson school of management curriculumthe ucla anderson school of management received its current name in 1987 following a 15 million gift by philanthropist john e anderson 3 students can choose concentrations in accounting angel investing debt and derivatives operational subjects such as supply chain management organizational behavior and project management and societal subjects such as political risk organization diversity and monetary policy the ucla anderson school of management offers a range of mba and postgraduate programs in addition to its full time mba program that students complete over two years anderson has a three year fully employed mba program and an expedited executive mba program the 15 month global executive mba program provides additional flexibility 4the school operates a network of dedicated research centers such as the laurence lori fink center for finance investments the morrison center for marketing data analytics and the ziman center for real estate the anderson school of management partners with the national university of singapore and universidad adolfo ibanez for the global executive mba ucla anderson tuitionthe estimated annual program cost for the full time program is 74 618 per year for the part time program the tuition fee is 1 740 per credit for both in state and out of state students students can apply for federal direct unsubsidized loans or federal direct grad plus loans 5graduate profilethe graduates of the ucla anderson school of management full time mba program saw a median starting salary of 145 000 in 2022 following graduation 93 9 of students secured employment within the first three months 6graduating students have found employment principally in the technology consulting and financial services sectors being hired by such companies as amazon wells fargo and citi 6
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does ucla have an online mba program
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ucla s anderson school of management offers a hybrid mba program both in class and online though classes are offered online there is an in person requirement of four campus visits per quarter which comes out to one weekend every three weeks 7
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does ucla anderson have executive leadership or continuing education courses
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ucla anderson works with businesses to create targeted learning experiences focusing on leadership behaviors team building and company focused projects anderson matches faculty and speakers based on their field of expertise for each organization 8
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what gmat score do you need to get into ucla anderson
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the average gmat score for the ucla anderson school of management s class of 2023 was 714 the middle 80 gmat range was 670 750 9the bottom lineucla anderson school of management is part of the university of california at los angeles ucla the mba program at ucla anderson school of management includes full time and part time programs and an executive mba the full time anderson mba program was ranked 19th by u s news world report in 2023
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what is udaap
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udaap is an acronym that refers to unfair deceptive or abusive acts or practices by those who offer financial products or services to consumers udaaps are illegal according to the dodd frank wall street reform and consumer protection act of 2010 the rules about udaaps were created by the consumer financial protection bureau cfpb enforcement is shared by the cfpb and the federal trade commission ftc understanding udaapdefining and outlawing udaaps were among the many steps that financial regulators took following the financial crisis it was during this time that financial regulators created new laws and regulations to protect consumers and boost consumer confidence in financial transactions the most notable piece of legislation was the dodd frank wall street reform and consumer protection act an unfair practice is one that harms consumers financially and that consumers cannot reasonably avoid the harm does not have to involve a large amount of money 1 under the law unfair practices do not benefit consumers or market competition which would make the potential for harm a valid trade off financial product and service providers are not allowed to the government does not determine which financial products and services are best for consumers but it does require that consumers have access to information that lets them choose the best options for their situations consumers should only have to take reasonable measures not impractical or expensive ones to determine whether purchasing certain financial products or services is in their best interests the law generally does not cover emotional harm except possibly in cases of excessive harassment the consumer financial protection bureau has a key role when it comes to udaaps dodd frank gives the agency the authority to make rules about these practices the act also includes the authority to enforce any actions that prevent the unfair deceptive or abusive acts or practices related to consumer offerings and transactions for financial products and services as long as the entity falls within the cfpb s jurisdiction 2the cfpb also grants enforcement authority to the federal trade commission just like the other agency the ftc ensures that financial products and service providers adhere to consumer protection laws by being truthful and ethical in their offerings and practices as such it is responsible for investigating complaints enforcing regulations and taking any action against entities that violate the law this includes issuing fines and penalties and even prosecuting offending service providers 34you can review the consumer financial protection bureau s definition of udaaps on its website if you feel that you ve been affected contact the cfpb or the ftc to file a complaint examples of udaapthe following are examples of unfair or deceptive practices regulators routinely evaluate financial products and services for potential sources of consumer harm the cfpb ordered three american express subsidiaries to refund about 85 million to around 250 000 customers in october 2012 the agency determined the subsidiaries harmed consumers in interactions ranging from advertising credit cards to accepting payments to collecting debts 5the bureau found that consumers were deceived about credit card rebates and about the benefits of paying off old debt the cfpb also found that some applicants were illegally treated differently based on their age among other charges 5
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what does udaap stand for
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udaap is an acronym that stands for unfair deceptive or abusive acts or practices by the providers of financial products and services they are illegal as per the dodd frank act the law gives authority to the consumer financial protection bureau to come up with rules surrounding these illegal acts the cfpb and the federal trade commission are both tasked with enforcing these regulations to ensure consumers are protected from unscrupulous lenders and financial institutions
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what constitutes a udaap violation
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there are many examples of unfair or deceptive violations these include failing to provide customers with promised services using bait and switch tactics and misleading consumers about costs and prices for products and services among others who has the rulemaking authority for udaaps the dodd frank wall street reform and consumer protection act was established following the 2007 2008 financial crisis its goal is to protect consumers and boost confidence in the financial system the act charged the consumer financial protection bureau with coming up with the rules surrounding udaaps the cfpb and the federal trade commission both enforce the regulations set forth the bottom linethe financial crisis of 2007 2008 brought to light many failures of the financial system one of these was the lack of transparency and accountability of certain financial institutions the dodd frank act helped establish rules to protect consumers and ensure that lenders banks and other financial service providers deal with consumers fairly and ethically both the cfpb and the ftc are responsible for ensuring that these entities live up to the rules if you feel that you ve been deceived or are the victim of unfair practices contact the cfpb or ftc and file a complaint
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what does ulcer index mean
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the ulcer index ui is a technical indicator that measures downside risk in terms of both the depth and duration of price declines the index increases in value as the price moves farther away from a recent high and falls as the price rises to new highs the indicator is usually calculated over a 14 day period with the ulcer index showing the percentage drawdown a trader can expect from the high over that period the greater the value of the ulcer index the longer it takes for a stock to get back to the former high simply stated it is designed as one measure of volatility only on the downside understanding ulcer index ui the ulcer index was developed by peter marin and byron mccann in 1987 for analyzing mutual funds marin and mccann first published it in their 1989 book the investor s guide to fidelity funds the indicator looks only at downside risk not overall volatility other volatility measures like standard deviation treat up and down movement equally but a trader typically does not mind upward movement it is the downside that causes stress and stomach ulcers as the index s name suggests calculating the ulcer indexthe indicator is calculated in three steps
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which price high is used in the ulcer index calculation is determined by adjusting the look back period a 14 day ulcer index measures declines off of the highest point in the past 14 days a 50 day ulcer index measures declines off of the 50 day high a longer look back period provides investors with a more accurate representation of the long term price declines they may face a shorter term look back period provides traders with a gauge of recent volatility
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using the ulcer indexmartin recommends the ulcer index as a measure of risk in various contexts where the standard deviation is usually used the ulcer index can also be charted over time and used as a kind of technical analysis indicator to show stocks going into ulcer forming territory or to compare volatility in different stocks investors can use the ulcer index to compare different investment options a lower average ulcer index means lower drawdown risk compared with an investment with a higher average ui applying a moving average to the ulcer index will show which stocks and funds have lower volatility overall watching for spikes in the ulcer index that are beyond normal can also be used to indicate times of excessive downside risk which investors may wish to avoid by exiting long positions image by sabrina jiang investopedia 2021
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what is an ultimate mortality table
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an ultimate mortality table lists the percentage of life insurance purchasers expected to still be alive at each given age beginning with age 0 which represents 100 of the population up to age 120 typically the data is based on a population of life insurance policyholders from either a particular insurance company or group of them rather than the entire u s population understanding an ultimate mortality tablemortality tables are essentially grids of numbers that show the probability of death for members of a given population within a defined period of time based on a large number of factored variables
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what mainly separates an ultimate mortality table from other mortality tables is its exclusion of recently underwritten policies the first few years of life insurance data is usually removed from the analysis to eliminate so called selection effects the rationale here is that people who just received life insurance will often have passed a medical exam and as a result should be statistically healthier and less likely to be on the brink of death than the rest of the general population
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the year raymond pearl introduced the world to mortality tables for the purpose of furthering ecological studies 1 the information underlying ultimate mortality tables is called survivorship data and takes into account many risk factors along with death and survival rates among age groups and sexes mortality tables may also list survival and death rates in relation to weight ethnicity and region some break out statistics for smokers and non smokers too in addition some might include an aggregate mortality table featuring death rate data on the entire study population that has purchased life insurance without a categorization based on age or time of purchase the data in an aggregate table depends on the combined statistics of several if not many individual mortality tables
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how an ultimate mortality table is used
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insurance companies use data from ultimate mortality tables to price their products and determine whether to offer coverage to an applicant life insurance guarantees a lump sum payment to named beneficiaries when the policyholder dies so studying the probability that an applicant might pass away during the period he or she seeks coverage for is essential to ensure the profitability of an insurance company the profitability of insurance products partly hinges on companies accurately analyzing the data behind ultimate mortality tables to a lesser degree investment management companies may also consult ultimate mortality tables to help their customers make determinations about their own respective life expectancies and how much money they might need in retirement special considerationsas is the case for other types of statistical data the accuracy of ultimate mortality tables depends on the breadth of data in the survey in other words an insurance company s ultimate mortality table may not be as precise as one compiled by an organization that s able to compile data sets from multiple insurers for instance the society of actuaries soa typically produces an ultimate mortality table each year that is based on a fairly wide data set it calculates mortalities for both men and women in the u s and also includes a blended table with the ultimate mortality of the entire u s population 2
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what is ultimate net loss
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ultimate net loss is a party s total financial obligation when an insured event occurs the insured s ultimate net loss from costs such as property damage medical expenses and legal fees will be offset by the portion of the loss that is paid by the insurance company usually the amount of the claim that exceeds the insured s deductible up to the policy maximum thus the insured s loss will often be limited to the policy deductible unless the total loss exceeds the policy maximum understanding ultimate net lossan insurance company s ultimate net loss from a claim may be offset by the salvage value of any recoverable items awards from successful claims against third parties money from reinsurance and the policyholder s deductible and policy maximum ultimate net loss can be a generic term that refers to the total amount of any loss but in finance it is most commonly used to refer to an insurance company s total loss from a policyholder s claim insurance companies can protect themselves against large ultimate net losses by sharing policy risk with reinsurers when an insurer shares a portion of the premiums it collects with a reinsurance company it gains protection against a portion of its claims losses for example an insurance company might receive 30 000 in annual premiums for a 10 million policy to protect itself against the threat of a 10 million loss the insurance company might cede 15 000 of the annual premium to a reinsurer who would agree to cover 5 million of the potential loss ultimate net loss and liability insurancein liability insurance ultimate net loss is the amount actually paid or payable for the settlement of a claim for which the reinsured is liable including or excluding defense costs after deductions are made for recoveries and certain specified reinsurance in liability insurance contract language ultimate net loss is often described as the total sum which the insured or his underlying insurers as scheduled or both become obligated to pay by reason of personal injuries and shall also include expenses for doctors lawyers nurses and investigators and other persons and for litigation settlement adjustment and investigation of claims and suits which are paid as consequence of any occurrence cover hereunder ultimate net loss and reinsurancein reinsurance ultimate net loss refers to the unit of loss to which the reinsurance applies as determined by the reinsurance agreement in other words the gross loss less any recoveries from other reinsurance which reduce the loss to the treaty in question
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what is the ultimate oscillator
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the ultimate oscillator is a technical indicator that was developed by larry williams in 1976 to measure the price momentum of an asset across multiple timeframes the indicator has less volatility and fewer trade signals compared to other oscillators that rely on a single timeframe because it uses the weighted average of three timeframes buy and sell signals are generated following divergences the ultimate oscillator generates fewer divergence signals than other oscillators due to its multi timeframe construction ultimate oscillator formula uo a 7 4 a 1 4 2 a 2 8 4 2 1 1 0 0 where uo ultimate oscillator a average buying pressure bp close min low pc pc prior close true range tr max high prior close true range tr min low prior close average 7 p 1 7 bp p 1 7 tr average 1 4 p 1 1 4 bp p 1 1 4 tr average 2 8 p 1 2 8 bp p 1 2 8 tr begin aligned text uo left frac text a 7 times 4 text a 14 times 2 text a 28 4 2 1 right times 100 textbf where text uo text ultimate oscillator text a text average text buying pressure bp text close text min text low text pc text pc text prior close text true range tr text max text high text prior close phantom text true range tr text min text low text prior close text average 7 frac sum p 1 7 text bp sum p 1 7 text tr text average 14 frac sum p 1 14 text bp sum p 1 14 text tr text average 28 frac sum p 1 28 text bp sum p 1 28 text tr end aligned uo 4 2 1 a7 4 a14 2 a28 100where uo ultimate oscillatora averagebuying pressure bp close min low pc pc prior closetrue range tr max high prior close true range tr min low prior close average7 p 17 tr p 17 bp average14 p 114 tr p 114 bp average28 p 128 tr p 128 bp
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what does the ultimate oscillator tell you
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the ultimate oscillator is a range bound indicator with a value that fluctuates between 0 and 100 levels below 30 are deemed to be oversold and levels above 70 are deemed to be overbought similar to the relative strength index rsi trading signals are generated when the price moves in the opposite direction as the indicator and they re based on a three step method larry williams developed the ultimate oscillator in 1976 and published it in stocks commodities magazine in 1985 1 with many momentum oscillators correlating too heavily to near term price movements williams developed the ultimate oscillator to incorporate multiple timeframes to smooth out the indicator s movements and provide a more reliable indicator of momentum with fewer false divergences false divergences are common in oscillators that only use one timeframe because the oscillator surges when the price surges the oscillator tends to fall forming a divergence even though the price may still be trending strongly even if the price continues to rise williams recommended a three step approach for the indicator to generate a buy signal williams created the same three step method for sell signals the ultimate oscillator vs the stochastic oscillatorthe ultimate oscillator has three lookback periods or timeframes the stochastic oscillator has only one the ultimate oscillator doesn t typically include a signal line although one could be added the stochastic does both indicators generate trade signals based on divergence but the signals will be different due to the different calculations the ultimate oscillator uses a three step method for trading divergence limitations of using the ultimate oscillatorthe three step trading method for the indicator may help eliminate some poor trades but it also eliminates many good ones divergence isn t present at all price reversal points and a reversal won t always occur from overbought or oversold territory waiting for the oscillator to move above the divergence high bullish divergence or below the divergence low bearish divergence could mean a poor entry point as the price may have already run significantly in the reversal direction as with all indicators the ultimate oscillator shouldn t be used in isolation but rather as part of a complete trading plan such a plan will typically include other forms of analysis such as price analysis other technical indicators and or fundamental analysis
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what is a technical indicator and how does it work
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a technical indicator uses historical data to anticipate price trends and pin down entry and exit points the data includes price and volume it s not a single mathematical approach you can choose from various versions of technical indicators depending on your goals and needs 2
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what are some technical indicators
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technical indicators can focus on various issues some of the more popular and well known include the rsi oscillator the bollinger bands indicator volatility and the fibonacci retracement support and resistance the best tool for you is the one that focuses on your concerns and your goals 3
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what is the relative strength index
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the relative strength index rsi measures the speed and range of price movements on a scale from zero to 100 but 70 and 30 are considered to be the pivotal numbers an rsi above 70 is flagged as overbought and one below 30 is considered oversold 4j welles wilder introduced the rsi in 1978 5the bottom linethe ultimate oscillator is a technical indicator that focuses on three timeframes seven 14 and 28 periods it has less volatility and fewer trade signals because it doesn t rely on a single timeframe it uses the weighted average of all three the 28 period carries the least weight you ll want to be very sure that you understand the calculation and math before you wade in and use this or any other indicator consider touching base with a professional if you re even a little unsure the comments opinions and analyses expressed on investopedia are for informational purposes online read our warranty and liability disclaimer for more info
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what is ultimogeniture
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ultimogeniture also known as postremogeniture or junior right is a system of inheritance whereby the youngest son gains possession of his deceased father s estate many rural areas of medieval england used this system as well as parts of france it often applied to farmland but sometimes included other types of land in addition to personal property this system is very rare today on the contrary primogeniture which means inheritance by a firstborn son is slightly more common today historically primogeniture has been the most prevalent inheritance system understanding ultimogenitureultimogeniture primogeniture and other forms of traditional inheritance are very rare in modern society most developed countries rely on trusts and wills that explicitly state the desires of the decedent however in the past the position of birth and the male gender tended to determine inheritance rights practicality played an important part in this system people didn t live as long in the past largely due to war and the spread of diseases as a result a family patriarch often died while he still had one or more minor sons bequeathing land to the youngest son encouraged the older minor children to remain on the farm at least until they became old enough to marry this kept a captive workforce and provided enough labor to support the patriarch s widow while ultimogentiure kept sons on the farm merchant families and nobility didn t have the same need for physical labor instead they tended to use primogeniture which grants the right of succession to the firstborn son primogeniture was also the primary method for establishing royal lineages and naming new kings as people eventually began to live longer primogeniture and other social norms for inheritance slowly replaced ultimogeniture for all social classes ultimogeniture vs modern day inheritancetoday inheritance depends far less on gender and birth order also because women make up a substantial percentage of the workforce children inherit both from mothers and fathers and sometimes from two of each considering split families and same sex households no matter the family make up estate planning and a will is important a will stipulates the bequest of assets to heirs as well as the settlement of estate taxes the presence of a will eliminates any chance of intestacy where inheritance decisions end up in the hands of a probate court in cases of intestacy the property goes to a surviving spouse first then to any children then to extended family and descendants however if no family can be found the property typically reverts to the state intestacy can be avoided by creating a will with the help of an attorney experienced in estate law a will can be set up very inexpensively in addition to wills some wealthier families set up trusts which grant certain legal protections to surviving spouses and children however trusts generally are more complicated and costly also it s important to know the trustee is in control of a trust not the person who established the trust for this reason simply having a will and spelling out who gets which particular assets is preferable in some instances
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what is an ultra etf
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an ultra etf is a class of exchange traded fund etf that employs leverage in an effort to amplify the return of a set benchmark since first arriving on the scene in 2006 ultra etfs have grown to include different etfs with underlying benchmarks ranging from broad market indexes such as the s p 500 and russell 2000 to specific sectors such as technology healthcare and basic materials ultra etfs are also known as leveraged etfs or geared funds 1understanding an ultra etfetfs are funds that invest in a basket of securities from the index that they track they generally aim to achieve the same returns as their benchmark by replicating its holdings offering investors the opportunity to mimic the performance of the broader equity market or in other cases gain complete exposure to a specific sector or trend a traditional exchange traded fund usually tracks the securities in its underlying index on a one to one basis meaning that if for example the s p moves 1 percent an s p etf will also move by 1 percent 2 alternative ones often referred to as ultra etfs seek to be more aggressive these marketable securities use financial derivatives and debt to amplify returns offering to double triple or more the long or short performance of a given underlying index 3leveraging is an investing strategy that involves using borrowed funds to buy options and futures to increase the impact of price movements increased daily volatility is both the biggest benefit and greatest danger of ultra etfs they are best suited to short term investing strategies or quick trading to maximize a given bet in the market due to the high risk high cost structure of ultra etfs they are rarely used as long term investments according to the prospectuses for these funds ultra etfs may not achieve double or more the return of the benchmark during flat markets long term returns may also diverge from the desired performance target the ultra etfs only aim is to amplify the daily return a goal they have succeeded in fairly accurately in the short time they can be analyzed 3the total assets of the proshares ultrapro qqq which offers 3x leverage as ofdecember 2023 it is the largest leveraged etf in the u s market according to vettafi 4
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how ultra etfs achieve leverage
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ultra etfs can achieve leverage in a few different ways the strategies below are meant to amplify the potential returns of the underlying index or asset class benefits of an ultra etfif an investor is convinced that the s p 500 is about to rise they will probably want to explore ways to make as much money as possible from this conviction an ultra etf can cater to those needs without incurring the additional expenses and stress of trading on margin a process whereby a broker lends money to customers so that they can purchase stocks or other securities with the securities held as collateral for the loan ultra etfs can be beneficial to tactical investors who are short on capital or allocation space within a diversified portfolio for instance they can invest 5 percent of their portfolios into an ultra etf and gain closer to 10 percent exposure due to the leveraged returns limitations of an ultra etfleverage is a double edged sword it can lead to significant gains as well as significant losses the use of leverage magnifies not only the return potential of these etfs but also the standard deviation making these investments riskier than non leveraged etfs targeting the same index or investment style in other words these vehicles are not for the average investor ultra etfs represent just a small portion of the total etf universe accounting for approximately 73 63 billion or 4 30 percent of the 1 71 trillion total etf market as of december 2023 56anyone looking to make long term buy and hold investments should also steer clear of ultra etfs daily rebalancing and compounding combined with leverage will cause investment results to diverge significantly over time from expectations 3 this is due to the wide variance of performance that make standard performance measures such as the geometric mean of limited use potential payoffs can be significantly impaired by charges too because of their complexity and use of borrowed funds ultra etfs carry much higher expense ratios than standard etfs the average fee for regular etfs is roughly 0 5 percent or 5 00 for every 1 000 invested in 2023 5 ultra etfs on the other hand usually come with expense ratios of 1 or more 6special considerationsultra etfs also enable investors to amplify their returns when shorting or betting against an underlying index inverse ultra etfs or ultra shorts use leverage to make extra money when a market declines in value when used properly they allow sophisticated investors to hedge existing long positions with short exposure 3there are potentially greater tax implications to consider when investing in ultra etfs ultra etfs buy and sell their underlying securities more frequently so when the fund realizes capital gains they may be passed onto shareholders as capital gain distributions should these arise due to rebalancing this may create short term capital gains it is important to understand that ultra etfs may be able to be held in tax advantaged accounts such as iras however be mindful that these etfs often have higher volatility and risk if you lose your capital from investing in an ultra etf it may not be possible to recapture that tax advantage benefit i e you re limited in what you can contribute to your ira each year
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what is the primary goal of ultra etfs
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the primary goal of ultra etfs is to provide traders with the opportunity to capitalize on short term market movements and amplify potential gains these etfs are typically used for tactical trading and often not for long term investment strategies
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what types of assets or indexes do ultra etfs typically track
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ultra etfs can track a wide range of assets and indexes including equity indices commodities fixed income instruments some popular ultra etfs are linked to major stock market indices such as the s p 500 gold or oil
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are there alternatives to ultra etfs for achieving leveraged exposure in the market
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yes there are alternatives to ultra etfs for achieving leveraged exposure these alternatives include options contracts leveraged mutual funds and leveraged index funds the bottom lineultra etfs also known as leveraged etfs are specialized exchange traded funds designed to provide amplified exposure to an underlying index or asset class they achieve this leverage through the use of financial derivatives allowing them to aim for double or triple the daily returns of the underlying benchmark note that ultra etfs are generally more suitable for short term investments and most often not deployed in long term hold strategies
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what is an ultra high net worth individual uhnwi
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ultra high net worth individuals uhnwi are people with a net worth of at least 30 million this category is composed of the wealthiest people in the world who control a tremendous amount of global wealth this group of people is small in terms of total population but it continues to grow in 2023 the group totaled 579 625 individuals globally down 3 8 from 2022 according to knight frank s wealth report series published in 2023 the u s has the most uhnwis globally by a large margin 41 6
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what is an ultra short bond fund
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an ultra short bond fund is a bond fund that invests only in fixed income instruments with very short term maturities an ultra short bond fund will invest in instruments with maturities of less than one year because of their focus on bonds with very short durations these portfolios offer minimal interest rate sensitivity and therefore lower risk and total return potential this strategy however tends to offer higher yields than money market instruments with fewer price fluctuations than a typical short term fund note that a short term bond fund like this should not be confused with a bear bond fund or etf that goes short bonds on a leveraged basis understanding ultra short bond fundsultra short bond funds give investors more significant protection against interest rate risk than longer term bond investments since these funds have very low durations increases in the rate of interest will affect their value less than a medium or long term bond fund while this strategy offers more protection against rising interest rates they usually carry more risk than most money market instruments further certificates of deposits cds follow regulated investment guidelines but an ultra short bond fund has no more regulation than a standard fixed income fund ultra short bond funds vs other low risk investmentsthe differences between ultra short bond funds and other fixed income investments with relatively low risks such as money market funds and certificates of deposit cds are important money market funds for instance may only invest in high quality short term investments issued by the u s government u s corporations and state and local governments conversely ultra short funds have more freedom and typically pursue higher yields by investing in riskier securities also the net asset values nav of ultra short bond funds fluctuate by contrast money market funds try to keep nav stable at 1 00 per share money market funds are also subject to strict diversification and maturity standards however these regulations do not apply to ultra short bond funds furthermore the federal deposit insurance corporation fdic does not cover or guarantee ultra short bond funds a certificate deposit on the other hand is insured up to 250 000 the fdic covers cds which promises a return of principal and a specified rate of interest because a bank or thrift institution holds the deposit also cds typically offer a better interest rate on deposited funds than a regular savings account ultra short bond funds that hold securities with longer average maturity dates will tend to be riskier than a fund with shorter average maturity dates all other factors being equal credit quality of ultra short bond fundsinvestors should research the types of securities in which an ultra short fund invests because a credit downgrade or default of portfolio securities may occur that can result in losses because short term bonds mature relatively quickly however credit risk is less of a factor for ultra short funds compared to traditional bond funds this risk is further reduced if a fund principally invests in government securities however investors should be aware of ultra short bond funds that invest in bonds of companies with lower credit ratings derivative securities or private label mortgage backed securities in an attempt to boost yield those types of funds tend to be subject to higher levels of investment risk as always be skeptical of any investment that promises you a greater potential for return at no additional risk investors can learn more about an ultra short bond fund by reading all of the fund s available information including its prospectus ultra short bond funds and high interest ratesin high interest rate environments ultra short bond funds of certain types may be extra susceptible to losses it is important for prospective investors to research a fund s duration which gauges how sensitive the fund s portfolio may be to fluctuations in interest rates any investment which promises a more significant potential for return at no additional risk should raise skepticism investors can learn more about an ultra short bond fund by reading all of the fund s available information including its full prospectus examples of ultra short bond fundsbelow is a shortlist of some of the better performing ultra short bond funds
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what is an ultra short bond fund
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an ultra short bond fund is a bond fund that invests only in fixed income instruments with very short term maturities an ultra short bond fund will invest in instruments with maturities of less than one year because of their focus on bonds with very short durations these portfolios offer minimal interest rate sensitivity and therefore lower risk and total return potential this strategy however tends to offer higher yields than money market instruments with fewer price fluctuations than a typical short term fund note that a short term bond fund like this should not be confused with a bear bond fund or etf that goes short bonds on a leveraged basis understanding ultra short bond fundsultra short bond funds give investors more significant protection against interest rate risk than longer term bond investments since these funds have very low durations increases in the rate of interest will affect their value less than a medium or long term bond fund while this strategy offers more protection against rising interest rates they usually carry more risk than most money market instruments further certificates of deposits cds follow regulated investment guidelines but an ultra short bond fund has no more regulation than a standard fixed income fund ultra short bond funds vs other low risk investmentsthe differences between ultra short bond funds and other fixed income investments with relatively low risks such as money market funds and certificates of deposit cds are important money market funds for instance may only invest in high quality short term investments issued by the u s government u s corporations and state and local governments conversely ultra short funds have more freedom and typically pursue higher yields by investing in riskier securities also the net asset values nav of ultra short bond funds fluctuate by contrast money market funds try to keep nav stable at 1 00 per share money market funds are also subject to strict diversification and maturity standards however these regulations do not apply to ultra short bond funds furthermore the federal deposit insurance corporation fdic does not cover or guarantee ultra short bond funds a certificate deposit on the other hand is insured up to 250 000 the fdic covers cds which promises a return of principal and a specified rate of interest because a bank or thrift institution holds the deposit also cds typically offer a better interest rate on deposited funds than a regular savings account ultra short bond funds that hold securities with longer average maturity dates will tend to be riskier than a fund with shorter average maturity dates all other factors being equal credit quality of ultra short bond fundsinvestors should research the types of securities in which an ultra short fund invests because a credit downgrade or default of portfolio securities may occur that can result in losses because short term bonds mature relatively quickly however credit risk is less of a factor for ultra short funds compared to traditional bond funds this risk is further reduced if a fund principally invests in government securities however investors should be aware of ultra short bond funds that invest in bonds of companies with lower credit ratings derivative securities or private label mortgage backed securities in an attempt to boost yield those types of funds tend to be subject to higher levels of investment risk as always be skeptical of any investment that promises you a greater potential for return at no additional risk investors can learn more about an ultra short bond fund by reading all of the fund s available information including its prospectus ultra short bond funds and high interest ratesin high interest rate environments ultra short bond funds of certain types may be extra susceptible to losses it is important for prospective investors to research a fund s duration which gauges how sensitive the fund s portfolio may be to fluctuations in interest rates any investment which promises a more significant potential for return at no additional risk should raise skepticism investors can learn more about an ultra short bond fund by reading all of the fund s available information including its full prospectus examples of ultra short bond fundsbelow is a shortlist of some of the better performing ultra short bond funds
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what is an umbrella insurance policy
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an umbrella insurance policy is extra liability insurance coverage that goes beyond the limits of the insured s homeowners auto or watercraft insurance it provides an additional layer of security to those who are at risk of being sued for damages to other people s property or injuries caused to others in an accident it also protects against libel vandalism slander and invasion of privacy
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how an umbrella insurance policy works
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the added coverage provided by an umbrella insurance policy is most useful to high net worth individuals who own a significant amount of assets or very expensive assets and are at risk of being sued small businesses may also use an umbrella insurance policy to guard against potential monetary damages arising from claims the premium for an umbrella insurance policy may be less expensive if it is purchased from the same insurer that provided the original auto homeowners or watercraft insurance depending on the provider the policyholder who wants to add an umbrella insurance policy must have a base insurance coverage of 150 000 to 250 000 for auto insurance and 250 000 to 300 000 for homeowners insurance umbrella insurance is often referred to as excess liability insurance if a policyholder is sued for damages that exceed the liability limits of car insurance homeowners insurance or other coverage types an umbrella policy helps pay what they owe in other words if the dollar limit of the original policy has been exhausted the umbrella policy acts as a fail safe so the insured person doesn t have to dip into savings and other assets 1umbrella insurance may also provide coverage not included in a basic insurance policy such as libel slander and false imprisonment special considerationspeople who purchase umbrella insurance may own expensive property or have significant savings those who own dangerous items that can cause injury such as swimming pools trampolines or dogs might also buy an umbrella insurance policy if you have a mortgage loan homeowners insurance is required by mortgage lenders however if you have high risk items on your property an umbrella policy can provide additional liability coverage that exceeds that homeowners policy people who engage in activities that increase their chances of lawsuits may also purchase umbrella insurance those activities might include the annual cost of a 1 million personal umbrella insurance policy2example of an umbrella insurance policyto understand how umbrella insurance can help consider the following scenario a driver runs a red light and accidentally hits another car causing significant damage to the vehicle and injuring several people with car repairs totaling 50 000 and the treatment of the injuries eclipsing 500 000 the driver at fault may be liable for expenses that go far beyond the coverage limits of their insurance an umbrella insurance policy will pick up the additional liability costs beyond the limits of their car insurance coverage
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why would someone need an umbrella insurance policy
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an umbrella policy is helpful if someone is injured on your property or you injure someone while using one of your possessions such as your car boat or automobile if you re sued and found liable the umbrella policy can cover the financial compensation to the injured party protecting your assets
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what is not covered by an umbrella policy
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an umbrella policy provides liability protection which helps cover the cost of damage to another person s property or if they re injured but it does not cover your possessions such as your home or automobile
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do retirees need an umbrella insurance policy
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if you have built up a substantial amount of assets and are at risk of being sued due to high risk items or activities such as having a swimming pool or boat or being a landlord you might consider an umbrella policy to provide additional liability protection the bottom linean umbrella insurance policy provides additional personal liability coverage for those with an existing policy the umbrella coverage kicks in when the liability coverage of the original basic policy has been exhausted those who own dangerous items that can cause injury such as swimming pools trampolines or dogs might buy umbrella insurance those engaged with others such as landlords coaches and board members might also buy umbrella insurance
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what is an umbrella personal liability policy
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an umbrella personal liability policy is extra liability coverage which goes beyond the limits of the insured s home auto or other liability coverage it provides an additional layer of security to those who are at risk of high loss if they injure someone else or someone s property an umbrella policy provides broad coverage meaning that some claims which would not be covered by a standard policy may have coverage under the umbrella policy breaking down umbrella personal liability policyumbrella personal liability insurance is often referred to as excess liability insurance it protects savings and other assets from a major lawsuit if a policyholder finds themselves on the wrong end of a damages lawsuit these lawsuits may exceed the liability limits of an automobile homeowners or other insurance coverage an umbrella policy kicks in to pay damages up to the ceiling stated in the contract before an individual can add umbrella personal liability to an existing policy it must contain minimum levels of liability specified by the insurance company depending on the provider the policyholder wanting to add umbrella coverage is required to have a base level of 150 000 to 250 000 for auto insurance and 250 000 to 300 000 for homeowners insurance umbrella policies usually do not add significantly to the premium since the risk of a significant claim is minimal also the premium may be less expensive if the policy comes from the same insurer that provides the original auto home or watercraft insurance umbrella personal liability policies do not cover business losses contract disputes or damages resulting from criminal actions umbrella policies protect people with a lot to losethe added coverage of an umbrella policy is most useful to wealthy individuals at significant risk of loss from a lawsuit for example if a driver with 5 million in assets hits and severely injures a pedestrian they could be liable for damages which far exceed the typical car insurance policy limit of 250 000 beyond medical bills the driver could be responsible for lost income of the injured pedestrian if the pedestrian happens to be a high earner and can no longer work the liability could quickly reach into millions of dollars wiping out the driver s fortune starting umbrella coverage is 1 million and increase in increments of 1 million in a lawsuit it is technically possible for a an individual to receive a judgment higher than their net worth however federal law puts strict limits on the garnishment of wages for civil damages 1 state laws will vary by jurisdiction on the protection they provide for assets as an example some states offer unlimited protection for the primary homestead while others grant limited protection and a few provide no protection at all the same applies to annuities and life insurance benefits learn more about protecting your assets by reading investopedia s build a wall around your assets
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what is umpire clause
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n umpire clause refers to language in an insurance policy that provides for a means of resolution by an unbiased third party if an insurer and an insured cannot agree on the amount of a claim payment an umpire clause is the same thing as an arbitration clause the arbitration process requires both the insurance company and the policy holder to hire an appraiser of their choosing to assess the damages and the cost to repair them the umpire will agree with one or perhaps both of the resulting appraisals and that amount will be used to satisfy the claim 1 understanding umpire clausethe umpire clause is closely related to the appraisal clause which allows a policyholder to hire an independent appraiser to determine the value of their damages in turn the insurance company will also hire their own appraiser the two appraisers will then get together and select an umpire the umpire is basically the arbitrator 1 these three individuals are known as the appraisal panel the purpose of the appraisal panel is to set or determine the amount of loss or the total dollar amount needed to return the damaged property back to it s original condition by repair or replacement with an appraiser panel in place the policyholder s chosen appraiser and the insurance company s chosen appraiser will review the documents estimates and differences between them they ll then try to resolve their differences in such a scenario the three will discuss the issues and try to reach an agreed settlement of the differences if disagreements between the two appraisers can t be resolved the umpire makes the ultimate decision interestingly not everyone one on the appraiser panel has to agree only two of the three individuals need to agree the umpire and either appraiser or the two appraisers themselves once two of the three individuals on the appraisal panel sign the award the dispute is over the amount on the award is paid to the policyholder example of how an umpire clause worksfor example let s say max has a car accident and his car is totaled he is at fault so he files a first party claim with his own insurance company the insurer determines that the value of his totaled vehicle is 10 000 and offers to pay him the 10 000 minus his 1 000 collision deductible according to his research max believes the value of his car to be closer to 15 000 since they are so far apart max and his insurer agree to invoke the policy s umpire clause and have an umpire and appraisers determine the value of the car
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what are the un principles for responsible investment pri
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the un principles for responsible investment pri is an international organization that works to promote the incorporation of environmental social and corporate governance factors esg into investment decision making launched in april 2006 with support from the united nations un the pri has over 4 900 participating financial institutions as of march 31 2021 these institutions participate by becoming signatories to the pri s six key principles and then filing regular reports on their progress 1understanding the un principles for responsible investment pri they core philosophy behind the organization is that environmental and social considerations are relevant factors in investment decision making and should therefore be considered by responsible investors for example supporters of the pri argue that it is both financially and ethically irresponsible to not consider the environmental impact of a company when assessing its merits as an investment by contrast many investors have historically viewed environmental and social impacts as negative externalities which can be ignored for purposes of investment decisions to combat this long prevailing attitude the pri put forward six core principles to which signatory companies must agree to commit themselves as expressed on the organization s website these six principles are as follows 3collectively the organizations that have become signatories to these six principles are responsible for a total assets under management aum of over 121 trillion 2 this includes many prominent founding signatories who helped launch the program such as the norwegian government pension fund the government pension fund of thailand the canada pension plan investment board and the california public employees retirement system calpers 4example of the un principles for responsible investment pri standard life is a financial services company that was acquired by manulife in 2015 standard life a pri signatory uses esg factors to assess emerging risks and opportunities in the automobile supply chain particularly as it relates to new anti pollution legislation being considered by the european union eu 5after analyzing the potential impact of this new legislation on various automakers and parts suppliers the company decided to make adjustments to their investments in that sector and also updated their valuation estimate of the lithium ion battery manufacturer lg chem this upward adjustment was due in part to their belief that the increased emission standards would accelerate the transition toward electric vehicles and create an increased demand for batteries worldwide 6
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what is unadjusted basis
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unadjusted basis refers to the original cost to purchase an asset this amount includes not only the initial price the purchaser paid to acquire the asset but also includes other costs such as expenses and liabilities assumed to purchase it adjusted basis is a related term and refers to any adjustments made to the original purchase price of an asset over time unadjusted basis is used mostly in accounting nomenclature and is akin to the concept of cost basis understanding unadjusted basisunadjusted basis is the initial value assigned to an asset it includes the cash cost or price of an asset any liability assumed to acquire the asset any asset the purchaser gave to the seller as part of the transaction and any purchase expenses incurred to acquire the asset purchase expenses may include commissions fees survey costs transfer taxes or title insurance for example example of unadjusted basissam purchased a building from emily using 100 000 in cash and a 50 000 mortgage as part of the purchase agreement sam also paid 1 000 in property taxes attributed to a period of time in which emily was still the owner of the property total closing costs and fees for sam to purchase this property were 4 000 sam s unadjusted basis for this property is 100 000 50 000 1 000 4 000 155 000 unadjusted basis in practicethe unadjusted basis is used to calculate the gain on the sale of an asset extending sam s purchase example above assume sam later sold this piece of property for 175 000 after costs and fees associated with the sale he could determine his return on investment by calculating the profit on the investment he earned 20 000 175 000 155 000 net of expenses on this investment which equates to a 12 9 return on investment 175 000 155 000 155 000 unadjusted basis is also the starting point for determining depreciation on an asset such as a plant or piece of manufacturing equipment in accelerated depreciation methods depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in the value of the asset over time accelerated depreciation methods allow the deduction of higher expenses from the unadjusted basis in the first years after purchase and lower expenses as the depreciated item ages
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what are unaffiliated investments
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unaffiliated investments are investment holdings of an insurance company that it neither controls nor shares joint ownership with unaffiliated investments can include stocks bonds property and other assets and are often disclosed in the financial statements of insurers understanding unaffiliated investmentsinsurance companies use the proceeds from their underwriting activities in a number of different ways they set aside funds as loss reserves to cover liabilities that they may incur from policyholders making a claim they pay commissions to brokers who bring in new business and operational expenses such as salaries benefits and overhead they also allocate capital to invest in securities of various liquidities in a bid to increase the return on the premiums they receive insurers need to have funds available quickly in order to cover liabilities as a result they often make short duration investments in highly liquid assets that can easily and promptly be converted into cash alongside longer term assets that may offer a higher return depending on the type of insurance policies underwritten an insurer s liability may last a few months to a few years short term assets are considered part of the insurer s current liquidity which is used to cover policies that have a duration of less than a year asset mixes vary over time depending on the economy and industry specific factors and also hinge on what the insurer specializes in life companies for example generally have longer term liabilities enabling them to invest more in longer term assets history of unaffiliated investmentshistorically insurers would generally invest in traditional asset classes that offer steady yields such as government bonds this approach has been complicated since the financial crisis now that ultra low interest rates are a regular fixture insurers have been forced to widen their nets to secure decent returns in most cases this has resulted in a shift to alternative investments including private equity and structured finance such as residential mortgage backed securities rmbs because these types of non traditional investments tend to be more complex an increasing number of insurers have begun outsourcing investment decisions to specialist investment management firms this has been particularly the case among smaller insurers who generally have fewer resources available to effectively manage portfolios on their own the hunt for yield and shift to more complex non traditional investments led about half of all u s insurers to outsource to an unaffiliated investment manager in 2019 according to the national association of insurance commissioners naic 1 special considerationsinsurers are required to report their financials to state insurance regulators periodically these regulators look at liquidity ratios in order to determine how quickly an insurer will be able to pay for its policyholder liabilities as well as to establish if the investment strategies and holdings of the insurer are likely to pose a threat to its solvency unaffiliated investments are included in the overall liquidity ratio though this ratio does not take into account affiliated investments they do not however appear in the calculation of an insurer s combined ratio this is because the combined ratio looks at cash outflows expense ratio loss and loss adjustment ratio and dividend ratio to see how much money it costs to maintain the book of business
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what are unallocated loss adjustment expenses ulae
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unallocated loss adjustment expenses ulae are costs incurred by an insurance company that cannot be attributed to the processing of a specific claim they are among the expenses for which an insurer has to set aside reserve funds in addition to allocated loss adjustment expenses and contingent commissions unallocated loss adjustment expenses combined with allocated loss adjustment expenses represent an insurer s estimate of the money it will pay out in claims in addition to the expenses associated with processing the claims understanding ulaeallocated loss adjustment expenses alae are expenses linked directly to the processing of a specific claim insurers that use third parties to investigate the veracity of claims or to act as loss adjusters may include this expense in its allocated loss adjustment expenses ulae expenses are more general and may include overhead and salaries the most common expenses fall into the categories of operations and field adjusters because unallocated loss adjustment expenses do not apply to a specific claim there s no loss date or report date for them this makes calculations tricky any of several methods are available for calculating ulae liability policies may contain a clause that allows the insurer to charge the client for some unallocated loss adjustment expenses the process of loss reserve development requires the insurer to adjust estimates to its loss and loss adjustment expense reserves over a period of time analysts can determine how accurate an insurance company has been at estimating its reserves by examining its loss reserve development reimbursement for ulaesome liability policies contain a clause called an endorsement that requires the policyholder to reimburse the insurance company for unallocated or allocated loss adjustment expenses these expenses may include fees charged by attorneys investigators experts arbitrators mediators and other costs incidental to adjusting a claim it is important to carefully read the endorsement language which may say that a loss adjustment expense is not intended to include the policyholder s attorney fees and costs if an insurer denies coverage and a policyholder successfully sues the insurer in this situation the insurance company has done no actual adjusting of the claim and should not be entitled to apply its deductible to the expenses incurred by the policyholder in defending the claim denied by the insurance company
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what is an unamortized bond discount
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an unamortized bond discount is an accounting methodology for certain bonds the unamortized bond discount is the difference between the par value of a bond its value at maturity and the proceeds from the sale of the bond by the issuing company less the portion that has already been amortized written off in gradual increments on the profit and loss statement
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how unamortized bond discount works
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the discount refers to the difference in the cost to purchase a bond its market price and its par or face value the issuing company can choose to expense the entire amount of the discount or can handle the discount as an asset to be amortized any amount that has yet to be expensed is referred to as the unamortized bond discount a bond discount to par value occurs when the current interest rate associated with a bond is lower than the market interest rate of issues of similar credit risk if on the date a bond is sold the listed bond s coupon or interest rate is below current market rates investors will only agree to purchase the bond at a discount from its face value because bond prices and interest rates are inversely related as interest rates move after bond issuance bond s will be said to be trading at a premium or a discount to their par or maturity values in the case of bond discounts they usually reflect an environment in which interest rates have risen since a bond s issuance because the bond s coupon or interest rate is now below market rates and investors can get better deals and better yields with new issues those selling the bond have to in effect mark it down to make it more appealing to buyers so the bond will be priced at a discount to its par value accounting for the unamortized bond discountthe bond s issuer can always elect to write off the entire amount of a bond discount at once if the amount is immaterial e g has no material impact on the financial statements of the issuer if so there is no unamortized bond discount because the entire amount was amortized orwritten off in one gulp usually though the amount is material and so is amortized over the life of the bond which may span a number of years in this latter case there is nearly always an unamortized bond discount if bonds were sold below their face amounts and the bonds have not yet been retired a bond s unamortized discount to par will unamoritzed bond premiumthe flip side or an unamortized bond discount is an unamortized bond premium a bond premium is a bond that is priced higher than its face value unamortized bond premium refers to the amount between the face value and the higher amount the bond was sold at minus the interest the unamortized bond premium is the part of the overall bond premium that the issuer will amortize that is write off incrementally against expenses in the future the amortized amount of this bond is credited as an interest expense
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what is unamortized bond premium
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an unamortized bond premium refers to the difference between a bond s face value and its sale price if a bond is sold at a discount for instance at 90 cents on the dollar the issuer must still repay the full 100 cents of face value at par since this interest amount has not yet been paid to bondholders it is a liability for the issuer understanding unamortized bond premiumthe bond premium is the excess amount that the bond is priced at over its face value when prevailing interest rates in the economy decrease the price of bonds increase this is because the market interest rate becomes lower than the fixed coupon rate on outstanding bonds since bondholders are holding higher interest paying bonds they require a premium as compensation in the market the unamortized bond premium is what remains of the bond premium that the issuer has not yet written off as an interest expense for example let s assume that when interest rates were 5 a bond issuer sold bonds with a 5 fixed coupon to be paid annually after a period of time interest rates declined to 4 new bond issuers will issue bonds with the lower interest rate investors who would rather buy a bond with a higher coupon will have to pay a premium to the higher coupon bondholders to incentivize them to sell their bonds in this case if the bond s face value is 1 000 and the bond sells for 1 090 after interest rates decline the difference between the selling price and par value is the unamortized bond premium 90 the unamortized bond premium is the part of the bond premium that will be amortized written off against expenses in the future the amortized amount of this bond is credited as an interest expense if the bond pays taxable interest the bondholder can choose to amortize the premium that is use a part of the premium to reduce the amount of interest income included for taxes special considerationsthose who invest in taxable premium bonds typically benefit from amortizing the premium because the amount amortized can be used to offset the interest income from the bond which will reduce the amount of taxable income the investor will have to pay with respect to the bond the cost basis of the taxable bond is reduced by the amount of premium amortized each year in a case wherein the bond pays tax exempt interest the bond investor must amortize the bond premium although this amortized amount is not deductible in determining taxable income the taxpayer must reduce his or her basis in the bond by the amortization for the year an unamortized bond premium is booked as a liability to the bond issuer on an issuers balance sheet this item is recorded in a special account called the unamortized bond premium account this account recognizes the remaining amount of bond premium that the bond issuer has not yet amortized or charged off to interest expense over the life of the bond example unamortized bond premium calculationto calculate the amount to be amortized for the tax year the bond price is multiplied by the yield to maturity ytm the result of which is subtracted from the coupon rate of the bond using the example above the yield to maturity is 4 assuming the bond matures in five years you can run the same calculation for the remaining three years for instance the bond s cost basis in the third year will be 1 083 60 6 64 1 076 96
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what are unappropriated retained earnings
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unappropriated retained earnings consist of any portion of a company s retained earnings that are not classified as appropriated retained earnings appropriated retained earnings are set aside by the board and are assigned to a specific purpose such as factory construction hiring new labor buying new equipment or marketing they will not be distributed to shareholders as dividend payments 1 unappropriated retained earnings can be passed on to shareholders in the form of dividend payments 2understanding unappropriated retained earningsunappropriated retained earnings help to determine the amount of dividends that will be paid to shareholders they are not directed towards a specific purpose by the board and therefore are available to be paid out as dividends the greater the unappropriated retained earnings the higher the dividend that can possibly be paid unappropriated retained earnings are divided among all of the outstanding shares of the company and paid as dividends according to a predetermined dividend payment schedule the level of unappropriated retained earnings can provide a certain amount of insight into a company for example if unappropriated retained earnings are increasing over time and are being paid out as dividends this can indicate that a company is performing better in that sales are up costs are static and earnings are not needed for business purposes on the other hand it could possibly indicate that management is not reinvesting in the company when it should be letting equipment age or not spending enough on marketing both of which could have adverse impacts down the road it s important to pay attention to where and how a company spends its earnings investopedia candra huffexample of unappropriated retained earningsfor the fiscal year end 2019 company xyz has retained earnings of 5 million currently the company s machinery is aged and out of date if the company invested in new state of the art equipment it could possibly lead to greater production and more efficiency in the future this would allow the company to remain competitive amongst its peers the company decides that it will need to spend 3 million on updating all of its equipment and the board approves that it should do so this 3 million would be classified as appropriated retained earnings as it will be allocated for a specific use buying equipment it is a decision made by management to reinvest in the company 1 the remainder of the retained earnings after accounting for the capital expenditure on equipment is 2 million 5 million 3 million 2 million this is the unappropriated retained earnings and this is the amount through which dividends will be paid out to shareholders based on the currently established dividend payment schedule 2
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what is an unauthorized insurer
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the term unauthorized insurer refers to a fraudulent business that is posing as a legitimate insurance company as the name suggests unauthorized issuers are not registered with their state s insurance regulator and as such are not permitted to legally sell insurance products purchasing insurance from an unauthorized insurer is very dangerous because the entity may not have the intention or capacity to fulfill its obligations
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how unauthorized insurers work
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those who operate unauthorized insurance companies are in effect perpetrating fraud on the public after all customers who rely on insurance companies themselves against personal or commercial risks may find themselves wholly unprotected if their insurer fails to honor their end of the transaction in the case of unauthorized insurers the customer may have little or no recourse since the unauthorized insurer may never have had the requisite assets to make good on their claims in some cases unauthorized insurers can fool professional intermediaries as well as policyholders for example unwitting insurance agents might be fooled into reselling or recommending the products offered by an unauthorized insurer in those instances the insurance broker might be held partially responsible for any losses or unpaid claims experienced by the policyholder moreover the insurance agent may also be charged with committing a crime be forced to pay a penalty and even have their insurance license revoked to protect against these risks it is wise for both individual customers and insurance professionals to check with their state insurance regulator before deciding whether to do business with a new insurance issuer that they are not already familiar with other best practices include paying attention to potential warnings signs that might indicate that a particular insurer is not legitimate examples include very aggressive agents or brokers who express an urgency to sign up for a product immediately premiums that seem unrealistically low compared to comparable companies coverage and the lack of any listed phone number or other customer service mechanisms example of an unauthorized insureremma is the owner of a small retail store and is looking for commercial insurance to protect her business against theft property damage and general liability to assist in her search she reaches out to a local insurance broker who claims to be an expert in the various options available in her region after briefly discussing her needs the broker recommends to her a product sold by a new insurer whose rates are nearly half those of the nearest priced competitor emma decides to sign on to this insurance package partly because the offer was only available for the next 24 hours a year later emma experiences a burglary at her store resulting in several months worth of lost inventory thankfully she remembers that she had purchased insurance against theft and other risks and had been diligently paying her monthly premiums therefore she fully expects to be reimbursed for her losses and fills out the necessary paperwork to file her claim after waiting several weeks without any reply emma is advised to inform her state insurance regulator about the unresponsive insurer to her surprise emma is told by the regulator that there is no record of her insurance company and that she was therefore unwittingly sold insurance by an unauthorized insurer depending on the details of her case emma may be entitled to some form of compensation from the state insurance regulator or another governing body although it is also possible that she will be forced to cover her business s losses personally it is also likely that the insurance broker who sold her the fraudulent policy will be investigated by the insurance regulator and may in fact be ordered to compensate emma for her loss
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what is unbanked
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unbanked is an informal term for adults who do not use banks or banking institutions in any capacity while often an issue in the developing world there are also pockets of unbanked adults in developed countries including the united states understanding the unbankedunbanked people generally pay for things in cash or purchase money orders or prepaid debit cards unbanked people also typically do not have insurance pensions or any other type of professional money related services they may take advantage of alternative financial services such as check cashing and payday lending if such services are available to them underbanked is a related term it refers to families who have checking or savings accounts but often rely on alternative financial services such as money orders check cashing services and payday loans as opposed to traditional loans and credit cards to manage their finances a federal deposit insurance corp fdic study revealed that more than 5 9 million or 4 5 of american households were unbanked in 2021 in the united states which is the fewest recorded since its survey was first conducted in 2009 1 in its 2019 study the fdic estimated that 7 1 million or 5 4 of households were unbanked 2the fdic stated in 2019 that unbanked rates tend to be higher among certain segments of the population namely households with low volatile or no income the fdic stopped asking about income volatility in its 2021 report 3 education can also be influential as people without a high school diploma were deemed more likely to be without a bank account 4black and latinx households are overrepresented among the unbanked according to a boston consulting group analysis of fdic data while they make up 32 of the u s population they represent 64 of unbanked households 5the rate of unbanked households varies greatly from one state to the next the highest rate of unbanked households remains in the south at 4 9 6 unbanked households in the remainder of the country were as follows mississippi had the highest rate of unbanked households at 11 1 utah had the lowest rate at 1 2 7the federal reserve fed also runs a survey on how households use banking services according to its findings 6 of u s households were unbanked in 2022 8
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why people become unbanked
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the main reason for being unbanked according to the fdic study is cost those who are unbanked can t meet banks minimum requirement balances another way of looking at it traditional banks don t provide access to the financial services and products that unbanked populations need for instance someone living paycheck to paycheck with very low or volatile income may not be able to wait for a paycheck to clear at a bank so they turn to a check cashing service which will provide cash immediately albeit for a fee in neighborhoods that are bank deserts such alternative financial services are also likely more common and open longer hours in other words more accessible and convenient than arranging for transportation to and from bank branches during limited banking hours these high transaction costs e g time cost to visit bank branches inconvenient hours lack of clarity about fees and alternative products that provided a more compelling value proposition have all been identified as reasons why people are unbanked 5lack of trust in banking institutions can also come into play distrust was the second main reason cited in the fdic study for being unbanked not surprising given the history of lending discrimination experienced by blacks and latinx in the u s and the lingering inequities 9 for instance predominantly black and latinx neighborhoods have been targeted for predatory lending including subprime mortgages 1011 recent immigrants who experienced banking crises in their countries of origin may also lack trust in banks being unbanked is sometimes attributed to people s lack of financial literacy or knowledge of banking products but about half of unbanked people have previously held a bank account so they are familiar with banking services 512the three main reasons people are unbanked are not having enough money to meet minimum balance requirements privacy concerns and not trusting banks according to the fdic 13initiatives to help the unbankedvarious state and federal programs have been aimed at helping the unbanked gain access to banking services and financial literacy some such initiatives include former california gov arnold schwarzenegger s bank on california initiative and the fdic s money smart program 1415the u s treasury department s section 326 regulations which allow banks and credit unions to accept identification issued by foreign governments seek to help undocumented immigrants become banked 16 the treasury department also makes federal payments to unbanked federal benefits recipients using a mastercard prepaid debit card 17
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why is being unbanked a problem
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being unbanked can be undesirable for several reasons alternative financial services such as cash checking services and payday loans are much more costly what s more without a bank account people don t generate the data they need to establish creditworthiness as a result when it comes time to cover an emergency car repair or medical bill a payday loan may be their only option these extra costs significantly hurt families who are already struggling to make ends meet
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how many people are unbanked
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the fed found that 6 of adults in the u s did not have a bank account in 2022 8 the fdic which uses different criteria said that an estimated 5 9 million or 4 5 of american households were unbanked in 2021 1who are the unbanked the fdic says that unbanked rates are usually higher among lower income households less educated households black households hispanic households american indian or alaska native households working age disabled households and single mother households 18
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what is an unbundled life insurance policy
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an unbundled life insurance policy is a type of financial protection plan that provides cash to beneficiaries upon a policyholder s death an unbundled life insurance policy contains a savings and investment component that the policyholder can use during his or her lifetime provisions of the policy do not have expiration dates and the policyholder can adjust the amount and timing of premium payments tied to the amount of the death benefit while the policy is in force unbundled life insurance is also called universal life insurance understanding unbundled life insurance policyuniversal unbundled life insurance is one of several types of permanent life insurance unbundled life insurance has a cash value component in which a portion of each premium payment can be saved and invested on the policyholder s behalf the other portion of the premium goes toward the death benefit and administrative expenses with universal unbundled life insurance the premiums and death benefit can be changed during the life of the policy this can be a desirable feature if the policyholder s needs change the universal unbundled policy also clearly discloses the policy s administrative fees also called underwriting and sales expense charges to the policyholder whereas other types of permanent life insurance policies may not within the permanent life insurance category individuals can choose from whole life universal unbundled life variable life and variable universal life options some of the key benefits of the unbundled life insurance policy include its flexibility and allowance for the policyholder to see exactly where his or her premium payments are going elements of unbundled life insuranceevery life insurance policy comes with its own provisions which can vary by company and type some of the basic elements an individual can expect in an unbundled life insurance policy include the following one of the most noteworthy features of an unbundled life insurance policy is its flexible premiums the flexibility in premiums is tied to both the option for an adjustable death benefit and the cash value element directly the premiums are based on the coverage amount and policyholder risks unbundled life insurance policies often allow the policyholder to adjust their death benefit and corresponding premium this allows the policy to be changed with the changing needs of the holder premiums can flexibly decrease or increase with decreases or increases in death benefit coverage unbundled life insurance policies include the option for a savings component the savings component will usually have a stated interest earning rate individuals can usually contribute to the cash value at any time or with payments in excess of their stated premium payments of the premium can usually also come directly from the cash value for added premium payment flexibility most unbundled life insurance policies come with a policy loan option the borrowing amount is usually based on the cash value this allows the policyholder to obtain tax free payouts but requires regular payments at a specified interest rate interest rates are often lower than other traditional loan options the loan can be considered a type of collateralized loan since the life insurance policy and its cash value usually serve as collateral for missed payments and defaults a surrender option allows the policyholder to terminate the policy and withdraw their cash value the cash value is usually subject to surrender charges which can vary depending on the year of termination cash values can usually be withdrawn directly by the policyholder other alternatives may also exist such as a paid in full life insurance policy death benefit for varying amounts
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what is unbundling
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unbundling is a process by which a company with several different lines of businesses retains core businesses while selling off spinning off or carving out assets product lines divisions or subsidiaries unbundling is done for a variety of reasons but the goal is always to create a better performing company or companies unbundling may also refer to offering products or services separately that had previously been packaged together investopedia paige mclaughlin
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how unbundling works
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the decision to unbundle may be called for by the board of directors or by company managers the board of directors may call for it if the company s stock is performing poorly the company needs to raise capital and or the company wants to distribute cash to shareholders unbundling might help the company to become a pure play for analysts to evaluate this means focusing on a core offering and can be compared easily to comparables in the industry for benchmarking this might improve analyst coverage and stock price management might call for unbundling if it thinks the result would help the company perform better when the board or managers call for unbundling it often improves the company s stock price unbundling might also occur when one company purchases another for its most valuable divisions but determines it has little use for other aspects of the business in some cases unbundling doesn t mean a company has sold off its bundled product line division or subsidiary it could mean it has split operations into different businesses while still maintaining control of each business when this type of unbundling occurs the newly formed companies usually have a great opportunity for success in the future a great example of product unbundling is the trend in the mobile phone space where cellphones and cellphone plans are no longer packaged together benefits of unbundlingproduct unbundling may be beneficial for a company looking to expand options for its consumers for example a company may offer package deals on products at a discounted rate but finds not every consumer benefits from the package the company will decide to unbundle these products to give its customer base a larger selection of items that meets the needs of the consumer
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when a customer wants less than a bundled package deal the company may unbundle to meet the needs of the consumer whether the company is planning to launch a new offering or unbundle packaged products it may see an increase in revenue by offering its consumers more the business may continue to experiment with its unbundled products while still analyzing its market on recently bundled products or new offerings based on the needs of the customers
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unbundling your products or services offers more choices for your audience by splitting them into multiple offerings tailored to meet the needs of your audience this helps a business reach different consumers by offering just what they want unbundling can also increase revenue in certain cases example of unbundling
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what is unc kenan flagler business school
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unc kenan flagler business school is the university of north carolina s business school founded in 1919 and located in chapel hill north carolina the school offers both undergraduate and graduate programs the unc kenan flagler business school is well known for its master of business administration mba program which places a high level of emphasis on leadership ability it is commonly ranked among the 30 best mba programs worldwide by leading publications overview of unc kenan flagler business schoolpreviously known as the university of north carolina s department of commerce the unc kenan flagler business school received its current name in 1991 in recognition of two major benefactors of the school philanthropist mary lily kenan flagler and her husband henry morrison flagler the renaming was in response to a large gift from frank hawkins kenan another kenan family member notable school alum are hugh mccoll former ceo of bank of america bac jason kilar co founder of hulu and michele buck ceo of the hershey company the school s programs include an innovative student run investment fund with more than 18 million in combined assets through this fund students can learn the principles of investment management hands on by making real world investment decisions across 13 different constituent funds at the graduate level unc kenan flagler business school offers a variety of mba programs including full time evening weekend and online options global mba programs are also available allowing students to study abroad through a network of international exchange partnerships the school also offers ph d s in accounting finance marketing operations and data management organizational behavior and strategy and entrepreneurship the full time mba class of 2024 at kenan flagler is 242 students the class has an average gmat score of 706 and an average gpa of 3 43 the majority of the class does not have a business background but has an average of five years of work experience unc kenan flagler business school is home to about 1 800 mba students and 1 200 undergrads they are met by a full time faculty of 133 members with specializations in areas such as finance accounting corporate communications marketing operations management strategic planning and organizational behavior the school has slightly higher acceptance rates than business schools like kellogg booth or wharton according to u s news and world report kenan flagler received 1 975 applications for the 2023 2024 school year there were 709 applicants accepted 35 9 kenan flagler requires a gmat or gre score for its graduate students however you can apply to have the gmat or gre waived if unc kenan flagler reputation and standingin 2023 u s news and world report rated the unc kenan flagler business school mba program as the twenty second best mba program in the world graduate employment is also notable unc kenan flagler business school mba grads saw an average starting salary of roughly 133 517 in 2022 and average signing bonuses of 30 359 employment statistics for the program show a 96 job offer rate and a 95 job offer acceptance rate historically these grads have found employment in the management consulting financial services and technology sectors which are common among contemporary american mba programs costs to attend unc kenan flagleras of 2023 the costs to attend kenan flagler are modest for north carolina residents compared to other top tier business schools non residents can expect to pay more
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is unc kenan flagler a good school
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kenan flagler is one of the top rated business schools in the world
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is unc kenan flagler mba worth it
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kenan flagler is rated in the top 30 business schools and it costs less than its ivy league or top 10 peers whether it is worth the cost depends on your location budget and career outlook after graduating the school has a 96 job offer rate suggesting employers respect and demand its graduates
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what gpa do you need for unc kenan flagler mba
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there is no gpa requirement but you must be able to compete with other applicants academically and meet other requirements the bottom linethe university of north carolina s kenan flagler school of business is one of the most noteworthy business schools in the world it is more affordable than many of its peer schools and has a high employment rate making it an attractive option for those pursuing a business career
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what is unchanged
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unchanged refers to a situation in which the price or rate of a security is the same between two periods this can be over any time frame including a trading day week or even as much as a year unchanged is a term used universally among equity fixed income futures and options markets the term also applies to indexes exchange traded funds and the net asset value of mutual funds while it is possible to note an unchanged price between two random times say 3 p m on a thursday and then at 10 15 a m the following tuesday most investors and traders focus on either unchanged intra day prices or unchanged closing prices over multiple trading days breaking down unchangedunchanged intraday prices are more common for securities that are fairly illiquid and generally less popular such as closed end funds microcap stocks and interests in private companies that do not trade on major exchanges certain exchange traded funds are also thinly traded and could be more likely to have unchanged prices conversely very few stocks on the s p 500 end a typical day unchanged or where the session s opening price and closing price are identical even during periods of relative market calm
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when choosing two random points on a price chart it is often possible to hand select two price points at which prices are identical in this case the holding period return between these points will be unchanged however this will not take into account the range of peak to trough price movements that is to say an investor s return excluding fees and expenses is unchanged but the security price likely moved around quite dramatically between those two points
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examples of unchangedfor example say west texas intermediate crude known as wti traded at precisely 70 32 at two particular market closes in both october 2008 and may 2018 the holding period return between these two points in time is unchanged this may be useful to know for an investor who held a long term futures contract during this precise time frame the peak to trough price of oil moved dramatically between these two points in time however as did underlying supply and demand conditions wti prices soon crashed to less than 40 in january 2009 amid the great recession climbed back above 100 a barrel in may 2011 then roughly moved sideways until july 2014 then prices plunged below 30 in february 2016 as shale oil extraction lifted inventories before finally getting back to 70 in may 2018 as those inventories ebbed and inflation began to creep higher 1 through all these gyrations the holding period return excluding fees and expenses is still unchanged
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what are unclaimed funds
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unclaimed funds are money and other assets whose rightful owner cannot be located unclaimed funds are typically turned over to the government after a specific period of time has passed to claim the funds or assets the designated owner or beneficiary must file a claim if the property is part of an estate the claimant may have to prove their right to it
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what was an ommer block
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in blockchains that use proof of work ommer blocks are rejected blocks created at the same time as another block the network can only choose one block to add to the blockchain in the ethereum blockchain this leftover block was called an ommer block in other blockchains they are called uncle or orphan blocks referring to the familial relationships used to describe block positions within a blockchain ommer blocks are no longer an issue under the proof of stake mechanism introduced to the ethereum blockchain in 2022 but blockchains that use proof of work still produce these extra blocks 12understanding ommer blocksin a public blockchain like ethereum and bitcoin it s essential to use a method that ensures data within the blockchain is verified and added by consensus it is equally important to keep data from being changed many blockchains use a data structure called a merkle tree to accomplish this a merkle tree establishes ancestral relationships for blocks of data information from previous blocks is included in new blocks similar to dna passed on between generations this creates the concept of a parent parent s sibling child and sibling blocks similar to a graphical representation of a family tree here s how it worked the first block in a tree could be named block a the next block created from block a would be considered block a s child and would include a s information plus its own this block could be called block b but could be represented as ba b would be the name of the new block and a referred to the data from the parent block this parent child relationship continued as more blocks were added with the information from each previous block this created a family tree and blockchain now consider if two blocks were validated and created simultaneously from ba they would become blocks cab and cab2 sibling blocks from the same parent block only one could be added to the blockchain so the network might choose cab cab2 was a fork of the original blockchain but was not added to it or validated finally another block is mined on the blockchain that kept cab this is block dcab cab2 was the sibling of dcab s parent so cab2 was an ommer block investopedia sabrina jiangspecial considerationsthese orphaned blocks were in essence bugs in the code unintended and accidental byproducts of the mining process however ethereum incentivized ommer block miners for several reasons ommer blocks were purposefully incorporated into ethereum s blockchain using the previous consensus mechanism s validation protocol casper the friendly ghost greedy heaviest observed subtree when a blockchain fork occurred from simultaneously created blocks network validators selected which block was used 3ethereum transitioned from proof of work to proof of stake consensus in 2022 under the proof of stake consensus mechanism ommer blocks ceased to be a concern because of the way blocks are created however ethereum classic which forked from ethereum after the dao hack in 2016 still produces ommer blocks although it calls them uncle blocks 1
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what was an ommer uncle block
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uncle block was the old name for an ommer block developers and the ethereum community decided that there was no reason to have gender specific names so they decided on ommer as the new name ommer blocks no longer occur under ethereum s proof of stake mechanism
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what is ethereum s ommer uncle rate
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the ommer rate previously the uncle rate was the rate at which the network produces ommer blocks the rate changed daily and depended on the number of transactions occurring there is no longer an ommer block rate on the ethereum main blockchain
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what is ethereum s ommer uncle reward
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under the proof of work consensus mechanism rewards for ommer blocks were a small percentage of the block reward plus transaction fees ethereum transitioned to proof of stake in 2022 so no more ommer blocks are created 2the bottom lineommer blocks were extra unaccepted blocks created by the ethereum mining network under proof of work mining ethereum incentivized these blocks in addition to accepted blocks because there was work done to create them after the merge in 2022 ethereum transitioned to proof of stake and no longer required mining no more ommer blocks were produced the comments opinions and analyses expressed on investopedia are for informational purposes online read our warranty and liability disclaimer for more info
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who is uncle sam
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uncle sam is a personified representation of either the united states federal government or the united states of america in general in finances uncle sam can refer to a specific tax or regulatory authority or more specifically the internal revenue service irs one might say for instance i have to pay uncle sam a portion of my income to pay for roads and hospitals understanding uncle sama popular etymology first traces the origins of the usage of uncle sam to early american military history when it referred to the meat packer samuel wilson wilson served as an officer during the american revolutionary war procuring meat supplies for the continental army 2after leaving the army he and his brother went on to establish a meatpacking house in troy new york which supplied u s troops in new york and new jersey who were fighting against british invaders during the war of 1812 barrels of wilson s meat stamped u s were associated with his nickname uncle sam which in turn became a personification of the national government as the initials for the united states are also u s 2before the 19th century the u s had been personified by the figure brother jonathan originally a derogatory term for puritans during the english civil war 3 female representations of the u s are also common columbia and since the 20th century lady liberty 1uncle sam in popular cultureuncle sam is sometimes used in the financial media to refer to the federal government particularly in the context of income taxes or financial regulation some tax sheltered products such as municipal bonds or qualified retirement accounts are sometimes referred to as off limits to uncle sam denoting that they are not subject to taxation by the federal government by regulating various financial activities and transactions such as the federal trade commission s ftc oversight of mergers and acquisitions m a uncle sam is said to have had his say or given his stamp of approval the character of uncle sam has been widely used in u s government propaganda to encourage support for various policies and military efforts over the years including the financing of these activities with varying economic impacts uncle sam was used for example to promote the u s treasury s liberty bond program to finance world war i military spending which one study showed help drive the financialization of the u s economy during the early 20th century 45in 1961 congress passed a resolution recognizing samuel wilson as the namesake of the uncle sam symbol 6the most popular image of uncle sam is based on a world war i military recruiting poster drawn by james montgomery flagg which features a stern uncle sam pointing an index finger outward and the words i want you for u s army this depiction features an older white man with a white goatee beard wearing an american flag inspired top hat and red bow tie his likeness has appeared numerous times since the 1910s 7was there a real uncle sam uncle sam is based on a real person named samuel wilson who started a meatpacking company after the american revolution his company supplied troops in the war of 1812 with meat earning him the nickname uncle sam
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what universal idea is the uncle sam poster meant to represent
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uncle sam is a personification of the u s government he is meant to represent the ideas of the government as opposed to other aspects of the nation such as liberty and freedom though the personification in some uses does represent the u s as a whole the famous uncle sam poster that points at the viewer stating i want you is meant to encourage enlistment in the u s military and was prominently used during world war i as well as to encourage the general population to support u s entry into the war
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what special meanings do the statue of liberty and uncle sam try to represent
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uncle sam aims to represent the u s federal government in that sense he represents support for the government taxation military enlistment and any other actions taken by the u s government lady liberty is meant to represent the ideals of the u s as a nation such as freedom liberty equality and the american dream
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what are uncollected funds
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the term uncollected funds refers to a portion of a check deposit that remains unavailable to the accountholder who made the deposit until the bank verifies that the funds associated with the deposit have been received by the depositor s bank once the deposited check has cleared the banking system the funds are deemed to have been collected at that point they become part of the accountholder s available balance
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how uncollected funds work
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uncollected funds are derived from deposits that need to be cleared by the depositor s bank before they re released for use the bank must verify that the deposited funds have been received from the bank that issued the check to the payee until then the bank refers to the funds as uncollected funds coded as ucf or uf for short and deposits appear as pending a check for a large amount that is deposited to an account is subject to a hold on most of the amount a portion typically is made available immediately to the depositor as long as the customer is in good standing with the bank a check written against an account with uncollected funds that bounces normally results in an uncollected funds charge this charge is also called a ucf fee and it is usually the same as the bank s non sufficient funds nsf fee as of 2023 some banks charged nsf and ucf fees that ranged from 30 to 40 1 however a growing number of banks have decided to stop charging nsf fees 2no uncollected funds charges are incurred if the available checking account balance can cover checks written against it benefits of uncollected fundsalthough there are numerous complaints about uncollected funds they do protect banks and their customers from certain types of fraud without uncollected funds it would be possible for someone to write a bad check on one bank account deposit it in another and then withdraw supposedly available cash this scheme is so easy and obvious that normally law abiding people in need of money perhaps those facing bankruptcy might be tempted by it even worse criminals could force innocent people into such schemes and then make them turn over the money uncollected funds are a way for a bank to tell customers that it received a check deposit but the funds are not yet available customers can consider the uncollected funds phase a short waiting period that supports good money management and helps them avoid unnecessary overdrafts for example a customer might deposit a check by sending it to the bank through the mail when the bank gets the check it will designate a portion of it as uncollected funds
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when the customer reviews their online banking account they will see the uncollected funds status and know that the bank received the deposit the customer can then check back later to see if the funds have cleared if they ve been made available the customer knows that they can use the money as needed
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during the uncollected funds hold period banks use these funds for short term investments that can add to their returns and income criticism of uncollected fundscustomers who face uncollected funds charges often find them to be unfair when people deposit checks many of them naturally assume that those deposits instantly become money in the bank that they can spend from this point of view an uncollected funds charge is a sneaky way for the bank to make money there is also a good argument that ucf fees are excessive the fact that they can be the same amount as nsf fees is particularly irksome a person writing a bad check normally has no reason to believe it will clear while someone with uncollected funds might think their money is available furthermore there might be little or nothing in an account with insufficient funds leaving the bank with a loss and a need to collect on the other hand it is easy for the bank to take ucf fees out of the uncollected funds when they are cleared which usually happens within a few days since uncollected funds are not available right away when do they become available in a day in a week check clearing times can be hard to determine and a source of frustration for customers granted this was more of an issue before online banking made it easier to determine the status of deposited checks still not everyone banks online so indeterminate holding periods may continue to be an issue for some the best way to avoid uncollected funds charges ucf fees is to check your account balance online after making a deposit make sure the deposit is part of the available balance rather than uncollected funds before spending it examples of uncollected fundsexample 1 jack a longtime customer of hometown community bank deposits a 1 000 check on monday 100 is available for withdrawal right away however the 900 balance is designated as uncollected funds so jack must wait until the check clears later in the week to draw upon that amount if jack tries to write a check against the balance and it has not yet cleared jack will incur an uncollected funds charge example 2 christine runs a small graphic design company a new client sends her a check for services rendered christine deposits the check into the company s business account knowing that the money is seen as uncollected funds and won t be available immediately because the client s bank isn t local it takes a day longer than normal for the check to clear but business is good and she can use existing funds in the account for her spending needs until the uncollected funds are verified collected and become available to her uncollected funds vs insufficient fundsit is crucial to make a distinction between uncollected funds and insufficient funds unlike uncollected funds an account with insufficient funds will not show a deposit pending such an account does not have enough money in it to meet demands against it writing a check against an account with insufficient funds will always result in a bounced check and incur a fee in fact people who knowingly write a check against an account with insufficient funds may be committing a crime on the other hand writing a check against an account with uncollected funds can work if the check is not cashed until after the uncollected funds have cleared
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how long can banks put a hold on uncollected funds
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according to the u s office of the comptroller banks must make 225 from your deposit available the day after you make the deposit and then normally the uncollected funds should be available on the second business day after the deposit was made holds can be extended if there is cause for concern involving the funds or the accountholder or the source of the money for deposit 3
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what does uncollected mean
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it refers to the fact that the funds relating to a bank deposit made by an accountholder have not yet been received collected from the bank that issued the check for deposit movement of money even electronically must be verified or cleared by financial institutions before that money can be made available to customers
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is writing a check on an account with uncollected funds a crime
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not if there are available funds in the account that can cover the check and if a check bounces most accountholders will be charged a ucf fee rather than with a crime the bottom lineuncollected funds are the part of any bank deposit that is normally quarantined for a short period of time and unavailable for use by a bank customer until the deposit clears the purpose of the uncollected funds phase is to ensure that the money related to a deposited check actually makes it into the bank account before it is spent this practice can protect banks and customers from fraud function as a basic money management tool for accountholders and provide banks with a short term investment window for added returns
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what is an uncommitted facility
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an uncommitted facility is an agreement between a lender and a borrower where the lender agrees to make short term funding available to the borrower this is unlike a committed facility that involves clearly defined terms and conditions set forth by the lending institution and imposed on the borrower uncommitted facilities are used to finance seasonal or temporary needs of businesses with fluctuating revenues such as paying creditors to earn trade discounts single or one off transactions and meeting payroll obligations
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how an uncommitted facility works
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because small businesses may struggle to have adequate monthly cash flow an uncommitted facility may help them operate until they establish a stronger presence in the marketplace and increase their annual revenues uncommitted facilities are generally less costly to arrange compared to committed facilities because the lender has no obligation to extend the loan when financing is made available it is short term and the credit risk is comparatively small uncommitted facility vs committed facilitya term loan from a bank a committed facility is for a specific amount with a specified repayment schedule and a fixed or variable interest rate for example many banks have long term programs offering small businesses the cash necessary for monthly operations in many cases a small business uses cash for purchasing fixed assets such as production equipment a term loan for equipment real estate or working capital is paid off within one to 25 years through a monthly or quarterly repayment schedule the loan requires collateral and a rigorous approval process for reducing the risk of repayment the loan is appropriate for established small businesses with sound financial statements and a substantial down payment for minimizing payment amounts and total loan cost example of an uncommitted facilityan overdraft or working capital facility solve companies short term cash flow issues the bank or other financial institution decides whether to lend money and the limit because an overdraft is typically payable on demand it is unsuitable for purposes such as funding a major acquisition the lender typically does not call in the overdraft unless the borrower s financial position or activities give the lender reasons for concern receiving an overdraft is typically a simple process however there is always uncertainty about whether the bank will lend to a specific business and when the lender will demand repayment plus a limited amount of capital may be borrowed and lender charges may be high also the borrower typically has little room for amending the lender s standard form for issuing an overdraft in addition the borrower may have to reduce the overdraft to a set amount for a particular number of days to ensure it is used only for short term cash flow issues
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what is unconditional probability
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an unconditional probability is the chance that a single outcome results among several possible outcomes the term refers to the likelihood that an event will take place irrespective of whether any other events have taken place or any other conditions are present the probability that snow will fall in jackson wyoming on groundhog day without taking into consideration the historical weather patterns and climate data for northwestern wyoming in early february is an example of an unconditional probability unconditional probability may be contrasted with conditional probability understanding unconditional probabilitythe unconditional probability of an event can be determined by adding up the outcomes of the event and dividing by the total number of possible outcomes p a number of times a occurs total number of possible outcomes p a frac text number of times a text occurs text total number of possible outcomes p a total number of possible outcomesnumber of times a occurs unconditional probability is also known as marginal probability and measures the chance of an occurrence ignoring any knowledge gained from previous or external events since this probability ignores new information it remains constant conditional probability on the other hand is the likelihood of an event or outcome occurring but based on the occurrence of some other event or prior outcome conditional probability is calculated by multiplying the probability of the preceding event by the updated probability of the succeeding or conditional event conditional probability is often portrayed as the probability of a given b notated as p a b unconditional probability also differs from joint probability which calculates the likelihood of two or more outcomes occurring simultaneously and is portrayed as the probability of a and b written as p a b it essentially incorporates the unconditional probabilities of a and b example of unconditional probabilityas a hypothetical example from finance let s examine a group of stocks and their returns a stock can either be a winner which earns a positive return or a loser which has a negative returns say that out of five stocks stocks a and b are winners while stocks c d and e are losers what then is the unconditional probability of choosing a winning stock since two outcomes out of a possible five will produce a winner the unconditional probability is 2 successes divided by 5 total outcomes 2 5 0 4 or 40
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what is an unconsolidated subsidiary
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an unconsolidated subsidiary is a company that is owned by a parent company but whose individual financial statements are not included in the consolidated or combined financial statements of the parent company to which it belongs instead an unconsolidated subsidiary appears in the consolidated financial statements of the parent as an investment this usually applies when the parent company does not have a controlling stake in the subsidiary understanding an unconsolidated subsidiarya company may be treated as an unconsolidated subsidiary when the parent company is not in control of a subsidiary has temporary control of the subsidiary or if the parent company s business operations are considerably different than that of the subsidiary different accounting treatments apply depending on the percentage owned by the parent company the ownership stake however is always less than 50 if the ownership stake is 20 or more but less than 50 the parent typically can exert some type of control over the subsidiary here the parent will use the equity method of accounting as the unconsolidated subsidiary is treated as an investment with more than 20 ownership in the voting stock of the subsidiary this is known as an influential investment under this method the parent must record any profit or losses realized from the subsidiary on its income statement parent companies with less than a 20 stake and no control of the subsidiary merely record the investment at historical cost or the purchase price on its balance sheet this is known as a passive investment however if dividends are paid which are cash payments to shareholders the parent records the dividend income but does not record any investment income earned from the subsidiary reasons to have an unconsolidated subsidiarymost often a parent company will create the unconsolidated subsidiary itself there are a variety of reasons it may do so including creating joint ventures jvs to split costs with another company or special purpose vehicles spvs to segregate revenues costs and profits for special projects from that of the parent company
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when a subsidiary or affiliated entity is a sizable operation a parent company s financial statements may not fully reflect its true exposure to all attached elements of its business
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while a parent company may not have managerial control of a subsidiary it could have significant exposure to the financial and operational dealings of the subsidiary for instance a multinational enterprise may experience political risk in another region from an accounting sense it might not make sense to account for the subsidiary beyond an investment on a parent s financial statements but the exposure does extend to the parent s core business example of an unconsolidated subsidiaryas an example let s say that company abc has a 40 controlling interest in its unconsolidated subsidiary business xyz which it created as an spv for a new construction project in a foreign country that will only last for a year xyz records 1 billion in profits for the year because abc owns more than 20 of xyz but less than 50 it will use the equity method of accounting for its unconsolidated subsidiary abc must record 400 million in earnings on its income statement since abc has a 40 stake and exerts some control over xyz also abc needs to record the increase in the value of the initial investment listed on the balance sheet by 400 million
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what is unconstrained investing
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unconstrained investing is an investment style that does not require a fund or portfolio manager to adhere to a specific benchmark unconstrained investing allows managers to pursue returns across many asset classes and sectors understanding unconstrained investingunconstrained investing rose to prominence in part from the mistrust surrounding the 2007 2008 financial crisis investors were wary of the market as well as benchmarks such as the s p 500 index or russell 2000 finance professionals often use benchmarks in investing to determine whether the performances of the portfolios they select and manage are meeting expectations fund and portfolio managers generally stuck closely to specific guidelines and measured their performance against fixed benchmarks this inflexibility meant that managers were not always able to take advantage of market changes in a timely manner it also meant that portfolio managers were highly invested in the u s market which happened to be sitting on top of a subprime mortgage bomb that seriously shook up the financial markets when it went off unconstrained investing as an alternative styleunconstrained investing focuses on performance over time rather than on short term gains it also eschews constraints that arise by focusing on benchmark tracking for example in the case of fixed income investing managers are not required to adhere to specific bond ratings currencies or sectors as these requirements may only apply to a portion of the portfolio bond portfolio managers are allowed to use derivatives to hedge against price and rate ranges as well as to bet against the market throughput and call options this can cause portfolios to see an increase in investment manager risk since inexperienced managers without guidelines or those operating more independently could make poor decisions that affect the value of the portfolio managers are entrusted with understanding not only how different asset classes and sectors interact but also how different geographies and governments impact performance it is worth noting that there will still be internal performance metrics and controls designed to measure and control risks the main difference is that a popular market benchmark will not be the main focus of the metrics access to unconstrained investing styleswhile some teams develop their own unconstrained investing styles established asset managers like j p morgan also have unconstrained strategies that many accredited and high net worth individuals can place their money with on its website j p morgan describes how its managers that pursue unconstrained investing strategies are able to research and develop their best ideas across a wide range of asset classes security types and sectors 1 another way to describe unconstrained investing is a multi sector multi asset global approach
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what is an unconventional cash flow
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an unconventional cash flow is a series of inward and outward cash flows over time in which there is more than one change in the cash flow direction this contrasts with a conventional cash flow where there is only one change in the cash flow direction understanding an unconventional cash flowin terms of mathematical notations where the sign represents an outflow and denotes an inflow an unconventional cash flow could appear as or alternatively this would indicate the first set has a net inflow of cash and the second set has a net outflow of cash if the first set represented cash flows in the first financial quarter and the second set represented cash flows in the second financial quarter the change in direction of the cash flows would indicate an unconventional cash flow for the company cash flows are modeled for net present value npv in a discounted cash flow dcf analysis in capital budgeting to help determine if the initial investment cost for a project will be worthwhile when compared to the npv of the future cash flows generated from the project unconventional cash flows are more difficult to handle in an npv analysis than a conventional cash flow since it will produce multiple internal rates of return irr depending on the number of changes in the cash flow direction in real life situations examples of unconventional cash flows are abundant especially in large projects where periodic maintenance may involve huge outlays of capital for example a large thermal power generation project where cash flows are being projected over a 25 year period may have cash outflows for the first three years during the construction phase inflows from years four to 15 an outflow in year 16 for scheduled maintenance followed by inflows until year 25 challenges posed by an unconventional cash flowa project with a conventional cash flow starts with a negative cash flow investment period where there is only one outflow of cash the initial investment this is followed by successive periods of positive cash flows where all the cash flows are inflows which are the revenues from the project a single irr can be calculated from this type of project with the irr compared to a company s hurdle rate to determine the economic attractiveness of the contemplated project however if a project is subject to another set of negative cash flows in the future there will be two irrs which will cause decision uncertainty for management for example if the irrs are 5 and 15 and the hurdle rate is 10 management will not have the confidence to go ahead with the investment
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what is unconventional oil
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in the oil and gas industry the term unconventional oil refers to crude oil that is obtained through methods other than traditional vertical well extraction examples of such methods include developing oil sands directional drilling and hydraulic fracturing colloquially known as fracking among others today unconventional oil is becoming increasingly common driven by new technological developments as well as economic considerations making it more cost effective and profitable some people however have concerns that unconventional oil extraction methods may be harmful to the environment
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how unconventional oil works
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there are two primary reasons why unconventional oil has become increasingly common in recent years the first has to do with the economic climate surrounding the oil extraction industry for instance in periods when the price of oil is relatively low companies face pressures to develop new technological means of extracting oil more efficiently in practice this means increasing the speed and reliability of equipment reducing the reliance on personnel through increased automation developing new techniques that reduce the amount of equipment or personnel altogether or some combination of the above all of these developments can cause the methods used for oil extraction to differ substantially from the traditional vertical wells used in conventional oil extraction directional drilling techniques for example have allowed companies to access multiple underground reserves using a single vertical well something which would have required multiple vertical drill sites in the past the same is true when oil prices are persistently high in those circumstances oil reserves that had previously been considered too difficult to be exploited economically may suddenly find themselves to be commercially viable targets for example increased oil costs helped encourage the development of the techniques now known as hydraulic fracturing which involves using steam gas and chemical injections to break up rock formations and extract the hydrocarbons contained within them ultimately it seems inevitable that a growing percentage of oil extraction techniques will come to be seen as unconventional by historical standards as oil becomes increasingly scarce and challenged by alternative energy sources such as solar wind and nuclear power it is likely that the techniques for oil extraction will continue to change and the industry works to continuously improve the efficiency of its production methods example of unconventional oil frackingperhaps the most famous example of unconventional oil extraction is hydraulic fracturing which was first invented in 1947 by engineers at the stanolind oil and gas corporation the basic premise of hydraulic fracturing is that it is possible to create newly accessible reserves of oil by releasing the hydrocarbons that are trapped within underground rock formations this is done by injecting highly pressurized fracking fluid into a well which then creates fissures in an underground rock formation the resulting oil which escapes from the fissures then gradually flows up through the well in the direction of the low pressure surface the movement of the oil toward the surface is further accelerated by artificially increasing the pressure inside the underground reservoir while also using chemical injections to adjust the viscosity of the oil example of unconventional oil oil sandsanother example is oil sands also known as tar sands these refer to soil and rock material that contains crude bitumen a dense viscous form of crude oil bitumen is too thick to flow on its own so specialized extraction methods are necessary as a result recovering usable crude oil from oil sands is a complex and expensive method of extraction however technological advances have made it less expensive over time and when oil prices are expensive in the market this type of unconventional oil becomes profitable oil sands are found primarily in the athabasca cold lake and peace river regions of northern alberta and saskatchewan canada and in areas of venezuela kazakhstan and russia bitumen is extracted and processed using two methods mining and in situ
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what is uncovered interest arbitrage
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uncovered interest arbitrage is a form of arbitrage that involves switching from a domestic currency that carries a lower interest rate to a foreign currency that offers a higher rate of interest on deposits with uncovered interest arbitrage there is a foreign exchange risk implicit in this transaction since the investor or speculator will need to convert the foreign currency deposit proceeds back into the domestic currency sometime in the future the term uncovered in this arbitrage refers to the fact that this foreign exchange risk is not covered through a forward or futures contract
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how uncovered interest arbitrage works
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uncovered interest arbitrage involves an unhedged exchange of currencies in an effort to earn higher returns due to an interest rate differential between the two currencies total returns from uncovered interest arbitrage depend considerably on currency fluctuations since adverse currency movements can wipe out all the gains and in fact even lead to negative returns if the interest rate differential obtained by investing in a foreign currency is 3 and the foreign currency appreciates against the domestic currency by 2 during the holding period the total return from this arbitrage activity is 5 on the other hand if the foreign currency depreciates by 4 during the holding period the total return is 1
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what is uncovered interest rate parity uip
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uncovered interest rate parity uip theory states that the difference in interest rates between two countries will equal the relative change in currency foreign exchange rates over the same period it is one form of interest rate parity irp used alongside covered interest rate parity if the uncovered interest rate parity relationship does not hold then there is an opportunity to make a risk free profit using currency arbitrage or forex arbitrage the formula for uncovered interest rate parity is f 0 s 0 1 i c 1 i b where f 0 forward rate s 0 spot rate i c interest rate in country c i b interest rate in country b begin aligned f 0 s 0 frac 1 i c 1 i b textbf where f 0 text forward rate s 0 text spot rate i c text interest rate in country c i b text interest rate in country b end aligned f0 s0 1 ib 1 ic where f0 forward rates0 spot rateic interest rate in country cib interest rate in country b uncovered interest rate parity is based on the theory that countries with high interest rates tend to have currencies that often depreciate this is calculated through the formula above which takes the spot exchange rate between the two currencies and multiplies this by the interest rate in one country divided by the interest rate in the second country in theory the expected spot exchange rate will be equal to the gap between the two countries interest rates however if this does not materialize investors can make a profit through taking a loan in a low interest rate currency and using it to purchase a high interest rate currency a currency with a lower interest rate will trade at a forward premium in relation to a currency with a higher interest rate for example the u s dollar typically trades at a forward premium against the canadian dollar conversely the canadian dollar trades at a forward discount versus the u s dollar
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what does uncovered interest rate parity tell you
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uncovered interest rate parity conditions consist of two return streams one from the foreign money market interest rate on the investment and one from the change in the foreign currency spot rate said another way uncovered interest rate parity assumes foreign exchange equilibrium thus implying that the expected return of a domestic asset that is a risk free rate like a u s treasury bill or t bill will equal the expected return of a foreign asset after adjusting for the change in foreign currency exchange spot rates
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when uncovered interest rate parity holds there can be no excess return earned from simultaneously going long a higher yielding currency investment and shorting a different lower yielding currency investment or interest rate spread uncovered interest rate parity assumes that the country with the higher interest rate or risk free money market yield will experience depreciation in its domestic currency relative to the foreign currency
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uip is related to the so called law of one price which is an economic theory that states the price of an identical security commodity or product traded anywhere in the world should have the same price regardless of location when currency exchange rates are taken into consideration if it is traded in a free market with no trade restrictions the law of one price exists because differences between asset prices in different locations should eventually be eliminated due to the arbitrage opportunity the law of one price theory is the underpinning of the concept of purchasing power parity ppp purchasing power parity states that the value of two currencies is equal when a basket of identical goods is priced the same in both countries this relates to a formula that can be applied to compare securities across markets that trade in different currencies as exchange rates can shift frequently the formula can be recalculated on a regular basis to identify mispricings across various international markets the difference between covered interest rate parity and uncovered interest rate paritycovered interest parity cip involves using forward or futures contracts to cover exchange rates which can thus be hedged in the market meanwhile uncovered interest rate parity uip involves forecasting rates and not covering exposure to foreign exchange risk that is there are no forward rate contracts and it uses only the expected spot rate there is no theoretical difference between covered and uncovered interest rate parity when the forward and expected spot rates are the same limitations of uncovered interest paritythere is only limited evidence to support uip but economists academics and analysts still use it as a theoretical and conceptual framework to represent rational expectation models uip requires the assumption that capital markets are efficient empirical evidence has shown that over the short and medium term time periods the level of depreciation of the higher yielding currency is less than the implications of uncovered interest rate parity many times the higher yielding currency has strengthened instead of weakened
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what is interest rate parity in simple terms
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interest rate parity looks at two core components the currency exchange between two countries and each currency s interest rate interest rate parity is a theory that suggests that the difference between these two countries is equal to the changes in the foreign exchange rate over a given time period
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what are the two types of interest rate parity
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the two main types of interest rate parity are covered and uncovered covered includes the use of forward or futures contracts that are intended to cover exchange rates and serve as a hedge uncovered does not involve these forward contracts to cover foreign exchange risk instead using expected spot rates
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what would an uncovered interest arbitrage imply
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uncovered interest arbitrage implies that foreign exchange investors can turn a profit through taking out a loan in a currency that has a low interest rate and buying a foreign currency with a high interest rate the bottom lineuncovered interest rate parity is based on the theory that foreign exchange rates smooth out the differentials between the interest rates of two different countries however this theory may not always hold macroeconomic factors such as monetary policy distortions in foreign exchange markets and time horizons can affect the validity of this theory 1for this reason investors may use this as an opportunity to earn money through taking a loan in a domestic currency with low interest rates and buying a foreign currency with higher rates as market imperfections and other factors affect the movement of currencies
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what is an uncovered option
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in option trading the term uncovered refers to an option that does not have an offsetting position in the underlying asset uncovered option positions are always written options or in other words options where the initiating action is a sell order this is also known as selling a naked option
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how an uncovered option works
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any trader who sells an option has a potential obligation that obligation is met or covered by having a position in the security that underlies the option if the trader sells the option but has no position in the underlying security then the position is said to be uncovered or naked traders who buy a simple call or put option have no obligation to exercise that option however those traders who sell those same options have an obligation to provide a position in the underlying asset if the traders to whom they sold the options do exercise their options this can be true for put or call options 1an uncovered or naked put strategy is inherently risky because of the limited upside profit potential and at the same time holding a significant downside loss potential theoretically the risk exists because maximum profit is achievable if the underlying price closes at or above the strike price at expiration further increases in the cost of the underlying security will not result in any additional profit the maximum loss is theoretically significant because the price of the underlying security can fall to zero with uncovered puts the higher the strike price the higher the loss potential an uncovered or naked call strategy is also inherently risky as there is limited upside profit potential and theoretically unlimited downside loss potential maximum profit will be achieved if the underlying price falls to zero the maximum loss is theoretically unlimited because there is no cap on how high the price of the underlying security can rise an uncovered options strategy stands in direct contrast to a covered options strategy when investors write a covered put they will keep a short position in the underlying security for the put option also the underlying security and the puts are sold or shorted in equal quantities a covered put works in virtually the same way as a covered call the exception is that the underlying position is a short instead of a long position and the option sold is a put rather than a call however in more practical terms the seller of uncovered puts or calls will likely repurchase them well before the price of the underlying security moves adversely too far away from the strike price based on their risk tolerance and stop loss settings using uncovered optionsuncovered options are suitable only for experienced knowledgeable investors who understand the risks and can afford substantial losses margin requirements are often quite high for this strategy due to the capacity for significant losses 2 investors who firmly believe the price for the underlying security usually a stock will rise in the case of uncovered puts or fall in the case of uncovered calls or stay the same may write options to earn the premium with uncovered puts if the stock persists above the strike price between the option s writing and the expiration then the writer will keep the entire premium minus commissions the writer of an uncovered call will keep the whole premium minus commissions if the stock persists below the strike price between writing the option and its expiration the breakeven point for an uncovered put option is the strike price minus the premium breakeven for the uncovered call is the strike price plus the premium this small window of opportunity would give the option seller little leeway if they were incorrect example of an uncovered put
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how risky is an uncovered call option
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uncovered or naked call options are very risky the profit potential is limited while the loss potential is unlimited the price can only drop to zero but it could rise almost infinitely
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what are uncovered option trading strategies
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uncovered option trading strategies benefit from collecting the premium without putting up a lot of capital however the risk is that the underlying security doesn t perform as expected and the options seller is obliged to quickly acquire a position regardless of price
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when deciding whether uncovered calls are worth it it s very important to remember that the reward is unlikely to outweigh the unlimited risk in these scenarios
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the bottom lineuncovered options are written options where the seller does not own a position in the underlying security selling uncovered options is a risky strategy because the seller may be forced to quickly acquire a position if the buyer exercises their option furthermore the profit potential is capped with uncovered options but the potential for loss is not
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what is an undated issue
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an undated issue is a government bond that has no maturity date resulting in interest payments that last into perpetuity understanding undated issuetechnically speaking the pre established agreed upon term for which an undated issue will pay interest is essentially forever an undated issue can function from the bond holder s perspective much like a dividend paying stock since the holder will continue to receive interest payments on a recurring ongoing basis for a long period of time for obvious reasons undated issues are sometimes also known as perpetual bonds or just perps for short while the government can redeem an undated issue if it so chooses it would usually not exercise this option since most existing undated issues have very low coupons there is little or no incentive for redemption undated issues are treated as equity for all practical purposes due to their perpetual nature as opposed to being treated as debt one difference that sets these bonds apart from other forms of equity though is that they come with no corresponding vote attached so the holder has no voting related influence or control over the issuing entity banks consider undated issues to be a form of tier 1 capital a category that includes equity capital and disclosed reserves this means that these bonds are useful in helping banks to fulfill their capital reserve requirements undated issues continue to be offered in the current financial landscape but they are not as in demand as the more popular financial instruments such as municipal bonds or treasury bonds undated issues in historyundated issues have been around for a long time many financial historians credit the british government for creating the concept or at least for introducing the first widely recognized examples financial experts recorded the first british release of undated issues back in the 18th century perhaps the best known undated issues are the u k government s undated bonds or gilts also referred to as gilt edged securities up until fairly recently there were eight issues in existence some of which dated back to the 19th century the largest of these issues in recent times was the war loan with an issue size of 1 9 billion and a coupon rate of 3 5 percent that was issued in the early 20th century however undated gilts have now become a part of financial nostalgia in the uk the last remaining undated bonds in the uk portfolio were redeemed in july 2015 as part of a program initiated by the british chancellor
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