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what is the net worth of george soros | as of december 2023 george soros has a net worth of 6 7 billion 2 | |
does george soros give any of his money away | the open society foundations founded by george soros are the world s largest private funder of independent groups working for justice democratic governance and human rights 9 soros has given a total of 32 billion to the foundations 3 he has also supported education giving a 500 million endowment in 2021 for example to bard college in annandale on hudson n y 10 | |
how did george soros make his money | george soros founded his first hedge fund double eagle in 1969 with profits from this fund he started soros fund management in 1973 4 eventually double eagle was renamed the quantum fund and it became the primary hedge fund that soros advised his knowledge of regional and global economic trends combined with his deep pockets and tolerance for risk has allowed him to amass a fortune now valued in the billions the bottom lineas one of the most noteworthy investors in modern history george soros is known for making outsized bets against the british pound and later the thai baht with the success of his currency bets soros has donated billions to promoting democracy and backing liberal causes around the world through the open society foundations | |
what is gharar | gharar is an arabic word that is associated with uncertainty deception and risk it has been described as the sale of what is not yet present such as crops not yet harvested or fish not yet netted gharar is a significant concept in islamic finance and is used to measure the legitimacy of a risky investment pertaining to short selling gambling the selling of goods or assets of uncertain quality or to any contract that is not drawn out in clear terms understanding ghararthe word gharar has become somewhat of a general term in the modern lexicon sales or financial transactions considered as gharar are judged relative to the level of misunderstanding that might exist between parties and the level of uncertainty that the goods or payment can be delivered gharar is generally prohibited under islam because there are a set of strict rules in islamic finance against transactions that are highly uncertain or that may cause any injustice or deceit against any of the parties the justification and guidance for forbidding contracts or transactions considered as gharar comes from the hadith a revered book in islam it contains the sayings of the prophet muhammad who spoke against the selling of the birds in the sky the fish in the water or the unborn calf in the mother s womb saying sell not what is not with you therefore questions of gharar arise when a claim of ownership is unclear or suspicious clarity of the intended meaning of gharar also comes in the quran where it states and do not eat up your property among yourselves for vanities which is interpreted as the prohibition of predatory business practices because such practices do not benefit the whole of society examples of ghararin finance gharar is observed within derivative transactions such as forwards futures and options as well as in short selling and other forms of speculation in islamic finance most derivative contracts are forbidden and considered invalid because of the uncertainty involved in the future delivery of the underlying asset scholars differentiate between minor and substantial gharar and while most derivative products are prohibited due to excessive uncertainty other practices considered as gharar such as commercial insurance are vital parts of economic life it is also permissible for a seller to short sell fungible items such as wheat and other commodities to be delivered at a later date to a buyer meanwhile the sale without physical possession is not necessarily condemned but the promise of delivery by either party without credibility is a violation also transactions and contracts are considered as gharar when excessive risks or uncertainty are combined with one party taking advantage of the property of the other or one party only benefiting by the other party s loss for that reason islamic finance also strictly prohibits extending loans with interest which it considers usury | |
what is a ghetto | the term ghetto is a derogatory term for a neighborhood characterized by low property values and relatively little public or private investment it is a slang term that is generally considered an offensive stereotype because ghettos have historically been inhabited by racial minorities the term is frequently used for communities with low incomes high unemployment inadequate municipal services or high school drop out rates from schools neighborhoods that are considered ghettos may be underpopulated with abandoned homes or they may be densely populated with large families living in small spaces 12understanding ghettosthe term ghetto comes from medieval europe cities in spain germany italy and portugal sought to segregate jewish populations into one area upon the suggestion of pope pius v during this period in 14th century venice italy jews settled into an area of an old iron foundry otherwise known as a ghetto 3 the term also has roots in the greek word ghetonia which means neighborhood or the italian borghetto which means small neighborhood in contemporary usage the word ghetto is a derogatory term for communities with minority populations these areas may be generally characterized by a lack of resources little development or high crime rates real estate values in these communities are generally much lower than in other parts of the same city as properties tend to be outdated and run down some of the homes and establishments in these areas may even be abandoned jim crow laws and income inequality contributed to the creation of many low income minority neighborhoods in the united states 4 some were formed after the civil war while others were created in the late 20th century in contemporary usage the word ghetto is considered offensive because it is often used as a derogatory term for communities of color in 2016 director quentin tarantino aroused controversy by using the term at the golden globes awards ceremony 5special considerationsareas that are considered ghettos in the united states statistically tend to be racially segregated 6 this reflects a history of segregation in the country as well as a history of inequality when it comes to access to income wealth property rights and other resources many of these neighborhoods lack adequate resources good schools and may even be heavily policed literacy and poverty rates tend to be fairly high while the level of education in many underdeveloped neighborhoods remains low when compared to other larger areas residents in these neighborhoods are also subject to predatory financial practices such as mortgage lending discrimination and redlining redlining is the illegal practice of denying financial services to residents of some areas based on their ethnicity or nationality although prohibited by the fair housing act of 1968 informal discrimination and housing segregation continued for many decades afterward government policiesmany neighborhoods that were once considered ghettos have seen major changes through what is referred to as urban renewal policies shifting racial demographics or gentrification 7 large investments come to these areas because of local or state policy generally from private entities governments create policies to entice real estate developers to purchase multiple properties in these areas companies often build new homes and commercial spaces taking advantage of incentives such as lucrative tax breaks and loose zoning laws changes often come quickly drawing in new residents and businesses and pushing out those who can no longer afford to live and do business there these urban renewal policies remain a controversial topic that s because they have been known to displace minority and low income residents who generally struggle to find affordable housing in a market with increasingly high property values not to mention small businesses that operate in these areas critics suggest policies should address and help shape the economic and social dynamics that led to the ghettoization of these neighborhoods 2although some of these areas have gone through the process of gentrification others may still show signs of inequality | |
what is the origin of the word ghetto | there are many possible origins for the term ghetto one theory holds that it originated in venice where the city s jewish residents were mandated to live in a specific neighborhood near an iron foundry this foundry or gheto became synonymous with the city s jewish community other theories tie the word to the greek ghetonia neighborhood or the italian borghetto small neighborhood | |
what is the gi bill | the gi bill also known as the serviceman s readjustment act of 1944 was enacted by congress and signed into law by former president franklin d roosevelt to provide various benefits to world war ii veterans 1 today the gi bill refers to any u s department of veterans affairs education benefit such as education grants and stipends earned by active duty service members veterans and their families 2understanding the gi billalthough the gi bill was purposed for wwii veterans benefits are currently available to honorably discharged veterans and their dependents under certain circumstances 4 many types of training are covered under gi bill benefits college programs include associate bachelor and advanced degrees vocational and technical training including non college degree programs also are covered on the job training and apprenticeships as well as licensing and certification reimbursement are included flight training correspondence training work study programs tuition and tutorial assistance also are covered survivors and dependents assistance provides education and job training for spouses and children of veterans 5the yellow ribbon program can pay tuition costs not covered in the post 9 11 gi bill 3 tuition assistance top up provides additional assistance with education costs 6 the 600 buy up program provides more money for monthly gi bill payments 7 tutorial assistance will help pay for a tutor for those using va educational benefits 8history of the gi billthe gi bill in its original form the servicemen s readjustment act of 1944 was designed to provide benefits including small business loans mortgages and education grants to veterans following wwii however it has since been updated 1 the gi bill is considered one of the most significant pieces of 20th century legislation passed by the u s congress much of the impetus for the bill s passage stemmed from the experience of veterans after wwi when returning service members were not aided in re entering civilian life and the workforce the lack of support and the advent of the great depression led to public protests including the bonus army marchers in 1932 the gi bill increased the number of college educated americans following the war as many veterans who would have rejoined the workforce instead opted for degrees in 1947 considered the peak of the gi bill s use roughly 49 of college admissions were for veterans 9the original gi bill ended in 1956 at which point more than half of veterans had opted to receive technical training or attend college 9 the g i bill has been updated several times since 1944 including the montgomery gi bill of 1984 the post 9 11 g i bill of 2008 and the vocational rehabilitation and education program the montgomery gi bill active duty mgib ad provides benefits for veterans who served at least two years on active duty the montgomery gi bill selected reserve mgib sr covers benefits for members of the army navy air force marine corps or coast guard reserve army national guard or air national guard 10 the post 9 11 gi bill helps pay for school or job training for those who served on active duty after sept 10 2001 11 | |
what is a giffen good | a giffen good is a low income non luxury product that defies standard economic and consumer demand theory demand for giffen goods rises when the price rises and falls when the price falls in econometrics this results in an upward sloping demand curve contrary to the fundamental laws of demand which create a downward sloping demand curve the term giffen good was coined in the late 1800s named after noted scottish economist statistician and journalist sir robert giffen the concept of giffen goods focuses on low income non luxury products that have very few close substitutes 1 giffen goods can be compared to veblen goods which similarly defy standard economic and consumer demand theory but focus on luxury goods examples of giffen goods can include bread rice and wheat these goods are commonly essentials with few near dimensional substitutes at the same price levels 2investopedia laura porterunderstanding giffen goodsgiffen goods are a rarity in economics because supply and demand for these goods are opposite of standard conventions giffen goods can be the result of multiple market variables including supply demand price income and substitution all of these variables are central to the basic theories of supply and demand economics examples of giffen goods are a study in the effects of these variables on low income non luxury goods which result in an upward sloping demand curve supply and demandthe laws of supply and demand govern macro and microeconomic theories economists have found that when prices rise demand falls creating a downward sloping curve when prices fall demand is expected to increase creating an upward sloping curve income can slightly mitigate these results flattening curves since more personal income can result in different behaviors substitution and the substitution effect can also be significant since there are typically substitutes for most goods the substitution effect helps strengthen the case for standard supply and demand in the case of giffen goods the income effect can be substantial while the substitution effect is also impactful with giffen goods the demand curve is upward sloping which shows more demand at higher prices since there are few substitutes for giffen goods consumers continue to remain willing to buy a giffen good when the price rises giffen goods are usually essential items as well which then incorporates both the income effect and a higher price substitution effect since giffen goods are essential consumers are willing to pay more for them but this also limits disposable income which makes buying slightly higher options even more out of reach therefore consumers buy even more of the giffen good overall both the income and substitution effects are at work to create unconventional supply and demand results 3historical research and giffen good examplesin his textbook principles of economics economist alfred marshall described robert giffen s work in the context of bread rising in price because people lacked the income to buy meat 4 however in 1947 the meat bread example was challenged by george j stigler in his article notes on the history of the giffen paradox 5 another example of the existence of a giffen good was offered by a 2007 study authored by harvard economists robert jensen and nolan miller who conducted a field experiment in the hunan province of china where rice is a dietary staple and in the gansu province where wheat is the staple randomly selected households in both provinces were given vouchers that subsidized the purchase of their respective staple foods jensen and miller found strong evidence of giffen behavior exhibited by hunan households with respect to rice lowering the price of rice through the subsidy caused reduced demand by households for the rice while increasing the price by removing the subsidy had the opposite effect however the evidence of wheat in gansu was weaker 6giffen goods vs veblen goodsboth giffen goods and veblen goods are nonordinary goods that defy standard supply and demand conventions with both giffen and veblen goods a product s demand curve is upward sloping income and substitution are key factors in explaining the econometrics of the upward sloping demand curve for giffen goods as discussed 7veblen goods also have an upward sloping demand curve but with some slightly different influences veblen goods are premium product luxury goods examples can include celebrity endorsed perfumes or fine wines with these goods their high price is associated with a high social status symbol as such high income consumers find these goods more desirable at a higher price the income effect has little impact on these goods because income is not a factor substitution is also a minimal factor because the goods are generally status symbols and not cross dimensional 8 | |
what is a gift card | a gift card is a prepaid debit card that contains a specific amount of money available for use for a variety of purchases store gift cards are designed to be used at specific merchants or retailers while general use prepaid gift cards are not affiliated with any specific merchant and can also be used to withdraw cash at automated teller machines atms 1 | |
how a gift card works | gift cards are a form of prepaid debit card that s loaded with funds for future use there are generally two types of gift cards open loop and closed loop both types typically can be used online and in person 2many gift cards also known as stored value cards will have a minimum and maximum initial loading amount for example there may be a minimum of 10 and a maximum of 500 in some situations gift cards can be used to pay for a portion of a purchase with cash debit or credit used to balance the expense as a precaution to mitigate the risk of losses many gift cards can also be registered online a procedure that allows the remaining balance to be tracked and frozen if a card is lost in this way some gift cards are safer than cash depending on the card in question a reload fee may apply to add money each time closed loop gift cardsclosed loop gift cards are often marketed by stores allowing a cardholder to purchase anything from that specified retailer closed loop cards generally can be used only with a single merchant either at the store or on its website 2 however if one company owns several different retailers it might issue gift cards that can be used at any of them gap inc gps is one such corporation its cards usually can be used interchangeably at any of its affiliated stores including gap banana republic old navy and athleta closed loop gift cards usually will not require any activation fees also these gift cards will not include a processor s logo the financial services company that actually handles the transaction mechanics though they do include the merchant s logo in a sense they act as advertising for the store closed loop gift cards usually are not reloadable so once the balance is spent they have no further use also funds on a closed loop gift card may have a specified expiration date which requires the user to use the card within a set time frame closed loop cards are popular gifts for wedding and baby registries many merchants also offer closed loop gift cards as a bonus for individuals who sign up for their registries the global gift card market is expected to achieve a compound annual growth rate of more than 12 through 2031 according to persistence market research 3open loop gift cardsopen loop gift cards offer the equivalent of cash or more precisely a credit or debit card that can be used at any merchant where that card is accepted as well as online 2 many of the major charge or credit card issuers processors such as american express visa discover and mastercard offer open loop gift cards these cards will display the payment processor s logo and can be used to make all types of electronic payments nearly anywhere open loop gift cards also have the advantage of serving as a standard prepaid card these cards are usually reloadable allowing the user to add funds on their own as well open loop cards will sometimes require an activation fee of approximately 5 which must be paid when the card is purchased digital gift cardsgift cards debuted in 1994 according to mageplaza an extension marketplace of the open source commerce platform magento 4 increasingly merchants are opting to offer digital gift cards to customers as an incentive to encourage spending upscale department stores such as saks fifth avenue and bergdorf goodman send bonus gift cards to their loyalty program members who have spent a certain amount during a promotion or over a certain time period however 75 of the volume in gift card program redemptions is still in physical cards vs 25 for digital gift cards according to a national gift card ngc industry survey 5gift card scamsgift cards are increasingly a target for scammers according to the federal trade commission ftc consumers reported gift card scam losses of 148 million in the first nine months of 2021 6these scams primarily revolved around scammers asking consumers to purchase gift cards as a form of payment the consumer provides the gift card number to the scammer based on the assumption that they re making a legitimate payment the scammer then makes off with the money another scam involves the compromise of physical cards in store scammers tamper with cards to obtain the gift card number when a consumer purchases the card and loads money to it the scammers are then able to steal those funds by using the card to make purchases target gift cards are particularly popular among scammers accounting for 35 million of the losses reported in 2021 6avoid purchasing gift cards in store that look damaged or otherwise tampered with and only use gift cards to make payments to people who you know and trust | |
what is a gift card | a gift card is a prepaid card that can be used to make purchases and execute other types of financial transactions gift cards be open loop or closed loop which can determine where and how the card can be used can i use a gift card to withdraw cash at an atm yes it s possible to use a gift card to withdraw cash at an atm if the card allows it typically this is only an option with open loop cards which are not affiliated with any store or merchant brand | |
do gift cards expire or have fees | depending on the card it s possible that a gift card may expire if the money loaded onto it is not used within a specific time period you may also pay fees to activate a new gift card or reload money onto an existing gift card some prepaid gift cards may also charge monthly or dormant account fees the bottom linegift cards can be useful for shopping online or in stores you may purchase them to give as gifts to friends and family or it s possible that you might earn gift cards as a reward when shopping with a particular merchant understanding how gift cards work and where you can use them is important for avoiding fees or the risk of having a gift card expire at the same time it s important to be on the lookout for gift card scams especially during the holiday season when more people are buying them and using them to shop | |
what is a gift causa mortis | gift causa mortis is a gift of personal property made with the expectation that the person giving the gift will soon die causa mortis gifts differ from an inheritance given or designated in wills understanding gift causa mortisgift causa mortis only can come into action after the death of the donor this is a form of a conditional gift and the gift can only be made if the donor anticipates death a gift causa mortis is known as the deathbed gift because it is the classic example of a gift being given by a donor at the time of death or on their deathbed a gift can be given causa mortis in anticipation of the death of the grantor or inter vivos during the life of the grantor a gift causa mortis is taxed under federal estate tax law in the same way as a gift bequeathed by a will a will is a legal document that is used to transfer an estate to beneficiaries after the death of the person who makes the will or the testator gift causa mortis versus gift inter vivosthere are two differences between the effect of an inter vivos gift and a gift causa mortis the first is that gifts causa mortis are revocable an inter vivos gift is irrevocable once the gift is given to the beneficiary the donor has no rights in the property and cannot take back the gift however the donor can revoke a gift causa mortis at any time for any reason as long as the donor is alive so while gifts causa mortis are completed upon delivery and acceptance the beneficiary s actual right to keep the gift is secured only once the donor dies after the donor dies the gift becomes irrevocable another difference between the two is that if the donor doesn t die the gift causa mortis is automatically revoked unlike a gift inter vivos a gift between living people gifts causa mortis are revocable and conditional they also differ in tax implications with a gift causa mortis the donor may unilaterally choose to revoke the gift at any time while they are still alive additionally the gift is either revoked or revocable at the donor s discretion if they survive the conditions that caused them to anticipate death the gift is also conditional on the beneficiary surviving the donor if the beneficiary dies before the donor then the gift is revoked and the beneficiary s estate retains no interest in the property gifts causa mortis also differ from other gifts in that they are taxed under federal estate tax law as if they were gifts bequeathed in a will this is largely because a gift causa mortis is incomplete until the death of the donor however a gift inter vivos that is made within three years of death will also be taxed under the federal estate tax law | |
what is a gift letter | a gift letter is a piece of legal written correspondence explicitly stating that money received from a friend or relative is a gift gift letters for tax purposes often come into play when a borrower has received assistance in making a down payment on a new home or other real estate property such letters state that the money received is not expected to be paid back in any way shape or form | |
how gift letters work | gift letters are important because in general lenders tend to frown upon borrowers using additional borrowed money for a down payment on a home or other property gifted money however is a different story a gift letter specifically references the fact that money is a gift and not a loan the gift giver must directly write the letter for it to have any validity the letter also often discloses the relationship between the gift giver and receiver a gift can be broadly defined to include a sale exchange or other transfer of property from one person the donor to another the recipient common forms of gifts include all gifts that exceed an annually determined amount are subject to income taxes if they are made to someone other than a spouse or qualified charity 3gift letters are legally binding and must be signed by at least the donor who does not expect to be repaid gift letter and additional gifting strategiesseveral gifting strategies rest on gift letters for example inter vivos gifting occurs while an individual is still alive and can reduce the taxable estate since the individual no longer owns the property when they die although inter vivos gifts may still be subject to taxes if made three years before that individual s death 45 for 2023 the estate and gift tax exemption is 12 920 000 per individual up from 12 060 000 in 2022 1many individuals choose to gift assets that will appreciate substantially in the future such as real estate particularly if it hasn t increased in value already this excludes its present worth from the donor s estate and also eliminates future appreciation from the estate in contrast gifting assets that have already increased significantly in value is less advantageous as the recipient will have the same tax basis carryover basis in the property as the donor if the recipient were to inherit that asset rather than receive it as a gift during the donor s life the asset s tax basis would be stepped up to the fair market value of the property at the time of death 678gift letters and mortgagesgift letters often heavily relate to real estate transactions consider a situation where a parent provides 100 000 of capital to their child for a down payment for a house in this situation the lender will likely want security that this money is a one sided transaction that is not to be repaid as part of qualifying for a home loan the lender may require both the donor and recipient to sign the letter agreeing that the funds are a gift a lender may request a gift letter if it recognizes abnormal or large transactions being deposited into a borrower s account contents of a gift letterthere is no singular universally accepted template for gift letters in general a party that requires a gift letter will often require the following contents | |
do gift letters get reported to the irs | the irs often requires written substantiation for charitable contributions these letters are often issued relating to donations or items given away for free without any return considerations 9 | |
why do lenders require gift letters | a lender for a home loan is in a position to evaluate the financial risk of the borrower there is a substantial difference between a large gift or a large loan a lender will require a gift letter as part of this evaluation to see what additional financial obligations the borrower has and what their extenuating financial position is | |
are gift letters legally binding | yes a gift letter is legally binding the information on the letter is used and relied upon by multiple parties and both the donor and recipient are expected to be bound to the terms of the gift letter the bottom linea gift letter is a written signed document that outlines that a lump sum of given by one party does not need to be repaid this letter is often required by lenders when issuing mortgages or home loans as individuals may be more likely to receive large sums of money in advance of their real estate purchase | |
what is a gift in trust | a gift in trust is a special legal and fiduciary arrangement that allows for an indirect bequest of assets to a beneficiary the purpose of a gift in trust is to avoid the tax on gifts that exceed the annual gift tax exclusion limit 1 this type of trust is commonly used to transfer wealth to the next generation understanding a gift in trustgifts in trust are commonly used by parents or grandparents who want to establish a trust fund for their children or grandchildren establishing a trust is an estate planning strategy that can be used to pass assets or wealth from the grantor the owner of the assets creating the trust to a beneficiary who receives the wealth the assets can be transferred based on the grantor s wishes meaning limitations can be established so that the recipient can access the money only when the stipulated instructions outlined in the trust have been met for example a parent might establish a trust in which the funds can t be accessed by the child until their 21st birthday typically the internal revenue service irs taxes the gifting of assets from one person to another however the gift tax is only triggered if the value of the asset being transferred is more than a specific amount called the annual gift tax exclusion amount the annual exclusion amount for gifts is 16 000 for calendar year 2022 and 17 000 for 2023 2a gift in trust is a viable method to avoid taxes on gifts that exceed the annual gift tax exclusion limit gift givers can give gifts in excess of the annual exclusion without paying taxes by establishing a special type of trust such as a crummey trust a gift to a crummey trust allows the beneficiary to withdraw the gift assets for a limited time which makes the gift considered to be a present interest and eligible for the gift tax exclusion if the gift did not have these limited time withdrawal rights it would be considered a future interest and be subject to gift taxes 3for example the trust could be set up so that the beneficiary can make withdrawals within a set time period such as within 60 or 90 days after that the gift funds held in the trust fall under the stipulated withdrawal rules as set by the trust s grantor in our example let s say the parent designates that a child can t access trust money until they turn 21 even if the child decides to tap into the trust immediately they only have access to the most recent gift as all previous gift funds remain protected within the trust account a crummey provision can also be housed within another type of trust for example traditional life insurance trusts often contain a crummey provision advantages and disadvantages of a gift in trustin addition to tax benefits a gift in trust is one method of establishing a financial cushion for future generations transferring wealth from one generation to the next via a will or other means of inheritance is a complicated endeavor both logistically and emotionally at the same time these rules can bring enormous benefits to individuals families and communities understanding the nuances of gifting can bring added value to both grantors and beneficiaries one potential drawback to a gift in trust is that providing beneficiaries in particular children with immediate access to sizable sums may jeopardize the fund s ability to accumulate long term wealth some families bypass this by setting restrictions such as limiting the amount or frequency of withdrawals or ending future gifts to recipients who withdraw funds immediately | |
what is gift inter vivos | a gift inter vivos a gift between the living in latin is the legal term that refers to a transfer or gift made during the grantor s life inter vivos gifts which include property related to an estate are not subject to probate taxes since they are not part of the donor s estate at death an inter vivos transfer is one made during the grantor s lifetime gifts that exceed 17 000 per year 16 000 in 2022 are subject to gift taxes if they are made to someone other than a spouse or a qualified charity the actual value of the gifted property is calculated at the time of the transfer the person receiving the gift does not need to report the gift to the irs or pay income tax on it but the giver of the gift must pay gift taxes on it if it exceeds the 17 000 threshold 1however there is a lifetime exclusion for the giver before gift taxes actually kick in adjusted annually for inflation in 2023 you can give 12 92 million in your lifetime without incurring any gift taxes an increase from the 2022 limit of 12 06 million 1understanding gift inter vivosa gift inter vivos is a useful estate planning strategy for several reasons giving a gift can help you reduce your taxable estate because it reduces your overall net worth additionally if you give a gift to a charity you can deduct the amount from your taxable income for the year many people give inter vivos gifts simply because they want to oversee the gift during their lifetime unlike gifts that are bequeathed through a will or a trust the reporting requirements on gift giving are minimal so if gifts are used to reduce the value of an estate the giver s property and affairs can retain a certain measure of confidentiality most gifts that exceed the gift limit can be added to the giver s lifetime exclusion amount of 12 92 million 1making an inter vivos giftthe donor must be of legal capacity and be at least 18 years of age when making the gift the intent to make a gift should be confirmed in writing and there must be a present and irrevocable transfer of title or right of ownership a donor cannot intend for the gift to transfer after his death delivery should be immediate either physically or symbolically particularly when the gift involves the transfer of property or something that is physically impractical to deliver following the gift the person making the gift relinquishes any rights to the property and can not get it back without the permission of the party that received it any attempt to control the gifted property or derive a benefit from it may void the gift s tax exempt nature thus putting the legal status of the transfer in question and making it susceptible to tax the recipient must accept the gift as well should the gift have actual value the law assumes the recipient will accept it however it is customary for the person receiving the gift to indicate their acceptance in writing to avoid confusion and formally complete the transaction example of an inter vivos giftjulia wants her grandson mike to have her family home mike has recently married has a baby on the way and julia is interested in moving to her second home in florida to escape the cold winters julia has just retired and is in good health and she knows mike could use the property or the money from the sale of the property right away to help support his growing family so rather than make mike wait until she dies to inherit her property she makes mike an inter vivos gift of the home after which he has full ownership and can do with it as she pleases since julia will no longer own the home at the time of her death it will not pass through probate or be subject to estate tax however the gift exceeds the gift tax limits so it might be subject to gift taxes however if julia notified the irs of the gift via her tax filing and added it to her lifetime gift exclusion it is likely taxes would not need to be paid | |
what are inter vivos gifts | inter vivos gifts are gifts given between people while they live the term is used to refer to gift values for tax purposes | |
what is a gift causa mortis | causa mortis is the term used for a gift given because of death 3 when someone is contemplating their death such as when they are dying and give someone a gift with significant value it is known as a gift causa mortis | |
what are the 3 elements that have to be present for a gift to be properly conveyed | the three elements necessary for proper gift conveyance are donative intent delivery or intended delivery and acceptance | |
how a gift of equity works | home equity is the value of a property minus any outstanding debts secured by that home giving a gift of equity means giving someone value in a home a homeowner typically sells it to someone else for less than its true market price the transfer counts as a gift because of the difference in value even if there are no payments from one party to the other for example if you own a home worth 300 000 and sell it to a family member for 200 000 they ve received a gift of equity of 100 000 a gift of equity can occur if a home is given away for no compensation or if a discount is offered on its value common gifts of equity are between parents selling their home and a child however these gifts can involve other family members such as grandparents aunts and uncles cousins siblings or a child gifting to a parent most lenders allow the gift to count toward a down payment on the home the residence that s changing hands can be a primary residence or a second home gifts of equity help the buyer reduce or eliminate down payment requirements making it easier to secure a mortgage buyers must still qualify for a mortgage even with a gift of equity this means that they ll need to meet the lender s requirements regarding credit scores and income they ll also need to have the necessary documentation to get approved for a mortgage sellers also need to consider what they re walking away from with a gift of equity they may be helping a relative to purchase a home who might be unable to otherwise however the seller could lose an opportunity to reap a sizable profit from the home s sale you can use a gift of equity or gift funds for different types of mortgages including conventional home loans or adjustable rate mortgages as well as federal housing administration fha and u s department of veterans affairs loans 12advantages and disadvantages of a gift of equitythe most obvious benefit of using a gift of equity is that the buyer doesn t have to secure a down payment that s because the gift of equity can be used as a down payment this saves the recipient time and money especially considering the minimum down payment for an fha mortgage is 3 5 3 here s a further list of the benefits of a gift of equity there are disadvantages to gifts of equity lower or no down payment for the buyerno need for cash to exchange hands between the giver and recipientno real estate agent commissions | |
doesn t avoid closing costs | may trigger a gift tax for the givermore capital gains may be incurred in the future because of the impact to property s cost basislower value could affect local real estate marketrequirements for a gift of equitya gift of equity requires a gift of equity letter which is a letter stating the facts of the sale signed by the seller and the buyer the letter must note who is offering the gift the amount of the gift of equity and the property in question it must also attest that it is in fact a gift not a loan 6here are other items that must be included in the letter at closing a second letter will note the gift of equity it s up to the person making the gift to decide how much equity to give for example suppose you sell your home to one of your adult children the home is appraised at 400 000 but you agree to sell it for 200 000 giving them a 200 000 gift of equity that sale price is up to you a gift of equity can help the new owner avoid the expense of private mortgage insurance example of a gift of equitya lender usually considers gifts of equity as part of the down payment required to qualify for a mortgage for example suppose a bank requires 20 down which is standard if you want to avoid mortgage insurance if the gift of equity made by the seller equals 10 of the home s value the buyer now only needs to make a down payment of 10 of the property s price here s a fuller scenario to illustrate these points suppose that you want to buy a home from a family member the home s fair market value is 600 000 which means that a 20 down payment is 120 000 if your family member sells the home to you for 550 000 giving you a 50 000 gift of equity you would only need 70 000 about 11 7 to cover the 20 down payment the amount required for the down payment is based on the kind of mortgage for example for an fha loan a gift of equity is allowed from a family member to cover a minimum 3 5 down payment as long as the home is the primary residence | |
what s the difference between a gift of equity and a cash gift for a home purchase | a gift of equity involves transferring part of a home s value as a gift while a cash gift is a direct transfer of money both can help a loved one purchase a home but a gift of equity is specific to real estate transactions eliminating the need for a cash transfer for the down payment or dealing with a third party in the sale of a property can a gift of equity be used in estate planning yes a gift of equity can be a part of estate planning it permits homeowners to transfer property to family members or other loved ones while still alive potentially reducing future estate taxes this could help ensure that the property remains within the family | |
how does a gift of equity affect the seller | gifts of equity could have tax implications for the seller depending on the size of the gift the seller may have to pay a gift tax unless the gift of equity is lower than the annual exclusion for 2024 that exclusion is 18 000 for single individuals and 36 000 for married couples 7 | |
does a gift of equity have tax implications | yes for the giver it can have tax implications the amount of equity gifted can count against the annual gift tax exclusion or the giver s lifetime gift tax exemption a gift of equity is not directly taxable for the recipient but could incur higher capital gains taxes later on 8 this is because the gift of equity reduces the buyer s cost basis increasing the likelihood that they will earn a profit the future sale price minus the cost basis if they sell the property all parties in a gift of equity should consult with a tax professional to understand any potential tax liabilities the bottom linea gift of equity is a way for a seller to help buyers usually family members purchase a home the seller doesn t give the buyers money as they would when giving cash for a down payment instead they agree to sell their home below market value this gives the buyer immediate access to more equity than they paid for | |
what is gift splitting | the term gift splitting refers to an estate planning tool that married couples can use to double their allowed annual gift tax exclusion amount the gift tax exclusion is the amount that someone can transfer to another person as a gift without having to pay the gift tax levied by the internal revenue service irs couples can use gift splitting to provide financial help to family or friends and avoid paying the gift tax married couples who want to take advantage of gift splitting must file joint tax returns in order to qualify | |
how gift splitting works | gifts of money or property are subject to a gift tax if the donor exceeds the annual or lifetime gift exemption gift splitting is an easy way for married couples to maximize their annual gift tax exclusion amount the internal revenue service allows married couples who file jointly to double the amount of their gift through gift splitting here s how gift splitting works married couples combine their individual allowances as if each contributed half the amount of the gift the thresholds are applied to each person who is the recipient of a gift for all gifts over the annual threshold amount form 709 united states gift and generation skipping transfer tax return must be filed with the irs 1this means that a couple could give up to 36 000 each to any number of people in 2024 without any tax consequences anything over the allowed 18 000 per individual is still not taxable as long as it s under the lifetime gift tax limit of 13 61 million for 2024 2to qualify for gift splitting in the eyes of the irs both spouses must agree to the gift and specify the situation in which the gift was given when filing their tax returns 3 the gift giver is responsible for paying any tax and filing the gift tax return which means that recipients generally aren t required to report the gift as income 4for the 2024 tax year the annual gift exclusion limit for a calendar year is 36 000 for a couple which is twice as much as the 18 000 threshold for an individual special considerationsif a couple divorces prior to filing their taxes for the year the gift took place neither spouse can be remarried for gift splitting to qualify in addition neither spouse can benefit from the gift and it must be made to a third party 3gifts of any amount made to spouses or political organizations and payments of tuition and medical expenses on behalf of others are generally not taxable as gifts 5 for gifts used for medical or educational expenses the gifts must be paid directly to the hospital school or applicable provider in order for the tax exclusion limits to be inapplicable 6as with all complex tax matters it s a good idea to consult with a tax professional prior to making large gifts example of gift splittinghere s a hypothetical example to show how gift splitting works let s consider the circumstances of mallory and river their daughter and son in law found out that they are expecting a second child the house where they currently live is too small and they need to build an addition to the property to accommodate the needs of their growing family the mckays are thrilled by the prospect of becoming grandparents again and are eager to contribute to the cost of the addition they expect that the additional room will cost around 30 000 knowing they would be subject to gift taxes on the funds if they wrote a 30 000 check the mckays decide to gift split mallory writes one check for 15 000 and river writes another for the same amount or they could write one check from a joint account for the total amount and still use the gift splitting option this allows their daughter and son in law to complete the remodel without having to worry about taking out a loan since they are going to split the gift between the two of them the mckays can avoid paying the gift tax but must file form 709 with the irs 7 keep in mind that no taxes would be due if the amount is still under the lifetime gift tax amount now consider the same example but instead of a second baby the mckays find out that their daughter is pregnant with twins in this case they need to add two rooms and a bathroom to their house which means the cost will be closer to 34 000 if they split the gift again and this time mallory writes a check for 17 000 and river writes a check for 17 000 or a single check from a joint account for the full amount they each must file form 709 with the irs in any instance both individuals must consent to the gift | |
what is the annual exclusion amount for gifts | the annual exclusion amount for gifts in 2024 is 18 000 any amount below this is not subject to a gift tax amounts over this are also not subject to tax as long as they are under the lifetime limit of 13 61 million in 2024 2 | |
what are some ways to avoid a gift tax | one of the ways an individual can avoid a gift tax is by spreading out the gift over a number of years this allows an individual to stay within the gift tax limit the gift can be provided for education or medical expenses given directly to the educational or medical facility this would avoid the gift tax married couples can also gift split which increases the amount that can be given without incurring the gift tax | |
what qualifies as a gift | most items such as cash real estate and assets qualify as a gift the only items that don t qualify as a gift are those that are used for educational or medical purposes as well as gifts made to political organizations 85the bottom linetaxpayers are allowed to give other individuals a gift of money or assets as long without incurring any taxes as long as the value of that gift doesn t exceed a certain amount couples can split gifts and avoid paying any gift taxes too if you re a married couple and decide to split the gift make sure you file form 709 which is the gift tax return 73correction may 8 2023 this article has been corrected to indicate that couples must file form 709 if they decide to use the gift splitting option | |
what is a gift tax | a gift tax is a federal tax imposed by the internal revenue service irs on individual taxpayers who transfer property to someone else without receiving anything of substantial value a gift can include cash real estate and other forms of property the irs limits how much can be transferred to someone as a gift any amount over this threshold must be reported and applied toward a lifetime gift tax exemption defining a gifta gift is anything of value that is transferred from one individual to another according to the irs the transfer may occur either directly or indirectly where full consideration is not received in return 1 to prevent people from avoiding paying income taxes the federal government created the federal gift tax this tax prevents undue hardship and obliges donors and recipients to honor their tax liability to the irs the following table shows what constitutes a gift 2irs limitsthe irs sets limits to how much people can gift annually and during their lifetime in 2024 individuals can give up to 18 000 to one or multiple people without being taxed 3someone with three children can gift as much as 18 000 per child for a total of 54 000 without needing to pay a gift tax for the year the lifetime limit for gifting is 13 61 million for 2024 4a married couple filing jointly can transfer up to 36 000 in 2024 5 couples are taxed if they exceed the annual exclusion limit and that amount counts toward their lifetime limit as a donor individuals report any gifts by filling out form 709 united states gift and generation skipping transfer tax return even if the gift falls under the annual limit and is untaxable this form must be attached to an annual tax return by the tax filing deadline of the year after the gift was made which is typically april 15 6gift tax rates are based on the size of the taxable gift and can range between 18 and 40 7 in cases where the value is not immediately evident such as art or stocks taxpayers use the fair market value fmv of the asset to assess their tax liability 8a generation skipping transfer tax gstt of 40 is levied when a gift over a certain amount is given to someone 37 years younger than you 9 that limit is the lifetime exclusion which is 13 61 million for 2024 4gift tax strategiesindividuals can gift more than the annual exclusion without reducing their lifetime gift tax exemption under certain 529 college savings plan contributions individuals report this gift as being spread over five years on their tax return and file the form annually however they cannot make additional gifts to the same recipient during this period 11examples | |
how much is the gift tax | the gift tax is applied on a sliding scale depending on the size of the gift it only kicks in on gifts above and beyond a certain threshold established by the irs first a flat amount is assessed additional tax is then levied at a rate that ranges from 18 to 40 7 | |
does the receiver of a gift pay tax | the person receiving a gift usually is not required to pay gift tax 12 | |
what is the lifetime limit for gifting | individuals can gift 13 61 million as of 2024 over their lifetime 43the bottom linethe gift tax is a federal levy that applies when individuals give gifts to another individual however the gift tax has been devised so that very few people pay it numerous types of gifts are exempted including those given to a spouse | |
what is a gift tax return | a gift tax return is a federal tax return that must be filed under certain conditions by the giver of a gift it is not a tax on returning gifts the return is known as form 709 | |
how the gift tax return works | individuals who give a gift that exceeds the annual or lifetime exempt gift limit established by the internal revenue service irs must fill out the form when filing their taxes the annual exemption limit is 16 000 per gift for 2022 17 000 for 2023 and the lifetime exemption in 2022 is 12 06 million 12 92 million for 2023 the lifetime exemption is inflation indexed so it will rise year over year 123for 2022 if an individual gifts anything over the limit even 16 001 to a single recipient that individual must fill out a gift tax return form the return must be filled out because gifts above the exempt amount are subject to a gift tax 2the gift tax return is only used by those who have given over 16 000 in 2022 17 000 in 2023 12 as the regulations applied to gift taxes are very complicated it is best to consult a professional as well as your local tax law in order to avoid the gift tax many people use estate planning working with a financial planner tax professional or attorney to strategically choose when how and who gets the estate owner s money who files the gift tax return and who pays the gift tax a gift tax is a federal tax applied to an individual giving anything of value to another person for something to be considered a gift the receiving party cannot pay the giver full value for the gift but may pay an amount less than its full value 2a gift tax return is a form that must be filed by a gift giver if they give any amount over the gift tax exemption unless special arrangements have been made it is always the gift giver not the recipient who is responsible for paying the gift tax and for filing the gift tax return 2the gift tax return is irs form 709 the receiver of the gift may pay the gift tax or a percentage of it on the giver s behalf in the event that the giver has exceeded their lifetime gift exclusion limit 2the federal government allows married couples who file together to double the amount of their gift tax through a process called gift splitting married couples combine their individual allowances as if each contributed half of the amount 2for gift splitting to be official both spouses must agree to the gift and specify the situation in which the gift was given when filing their taxes a couple filing a gift tax return in 2022 could gift 32 000 before the giver needed to pay taxes on the amount that amount increases to 34 000 in 2023 12 | |
what is a gig economy | a gig economy is a labor market that relies heavily on temporary and part time positions filled by independent contractors and freelancers rather than full time permanent employees gig workers gain flexibility and independence but have little or no job security many employers save money by avoiding paying benefits such as health coverage and paid vacation time others pay for some benefits to gig workers but outsource the benefits programs and other management tasks to external agencies understanding a gig economythe gig economy is a labor market characterized by temporary contract and freelance jobs rather than permanent positions in this economy people earn money from providing on demand work services or goods in other words people get paid when their services are required 1the term gig economy is often associated with taxi and delivery drivers however it actually stretches way beyond driving for uber or lyft or delivering food for doordash a wide variety of positions fall into the category of a gig the work can range from renting out rooms on a short term basis or tutoring to writing code or freelance articles adjunct and part time professors for example are contracted employees as opposed to tenure track or tenured professors colleges and universities can cut costs and match professors to their academic needs by hiring more adjunct and part time professors people who don t use technological services such as the internet and in some cases don t live in cities may be left behind by the benefits of the gig economy the gig economy can help companies and institutions save money and some of these savings may be passed on to consumers resulting in lower prices however it can also leave workers worse off financially the gig economy is growingthe gig economy experienced significant increases in 2020 covid 19 lockdowns forced people to work from home and rely more on purchasing goods and services online and these trends continued when restrictions were lifted the pandemic taught businesses that having staff work from home can be fruitful for all parties and it taught consumers about the convenience of getting things delivered today gig workers make up a significant portion of the employment pool in the united states as many as 64 million americans are freelancers or gig workers according to a 2023 upwork report this represents 38 of the u s workforce these workers contributed as much as 1 27 trillion to the u s economy 2 this figure could rise as these positions facilitate independent contracting work with many of them not requiring a freelancer to come into an office the term gig economy is borrowed from the music world where performers book gigs that are single or short term engagements at various venues the factors behind a gig economyemployers have a wider range of applicants to choose from within the gig economy because they don t have to hire someone based on their proximity technology has developed to the point that it can either take the place of the jobs people previously had or allow people to work just as efficiently from home as they could in person economic reasons also factor into the development of a gig economy employers who cannot afford to hire full time employees to do all the work that needs to be done will often hire part time or temporary employees to take care of busier times or specific projects employing people in this way can also mean not having to pay benefits such as vacation or sick pay there are also benefits for employees the gig economy offers greater flexibility in terms of working hours and in some cases location work done over the internet can be executed from anywhere in the world it s no longer necessary to live in or nearby big cities to do certain jobs these days it s possible to work for example for a new york company while living in the mountains or on the other side of the world working in the gig economy also offers the opportunity to earn an additional income you could have a 9 5 job and then during the evenings do something else as a side hustle criticisms of gig economiesdespite its benefits there are some downsides to the gig economy the gig economy trend can make it harder for full time employees to develop their careers since temporary employees are often cheaper to hire and more flexible workers who prefer a stable secure and traditional career path are being crowded out in some industries the gig economy is often associated with eroding worker rights the benefits that come with permanent positions such as health insurance and sick and vacation pay are often nonexistent and having a bigger supply of workers to choose from means employers are under little pressure to change that or pay higher wages a byproduct of opening up positions to people living anywhere in the world including places where the cost of living is much cheaper is lower wages and when governments intervene and enforce higher remuneration consumers risk being punished through higher prices 3employees can cost companies up to 30 more than independent contractors 4there s also the mental health aspect the flexibility of working gigs can disrupt the work life balance sleep patterns and activities of daily life flexibility often means that workers have to make themselves available whenever gigs come up regardless of their other needs taking an evening or day off can be hard loneliness is another issue moreover long term relationships between workers employers clients and vendors can erode this can eliminate the benefits that flow from building long term trust customary practice and familiarity with clients and employers the gig economy may also discourage investment in relationship specific assets that would otherwise be profitable to pursue since no party has the incentive to invest significantly in a relationship that only lasts until the next gig comes along | |
what is an example of a gig economy | gig economy jobs are often one time or short term contract jobs these include driving for a ride sharing service painting someone s house freelance work coaching fitness training and tutoring the job is exchanged for cash and there are no other benefits such as health insurance | |
what are the benefits of the gig economy | the gig economy has many benefits for both the employee and employer an employer has access to a wide range of talent that it can hire if the talent proves to be less than acceptable there is no contract to keep the employee on or issues of letting them go and in a time when it has become difficult to attract full time workers employers can hire from the gig economy in addition hiring gig workers can be more affordable as companies don t have to pay for health insurance or other benefits for employees the gig economy s benefits include having the option to do multiple jobs work from anywhere depending on the specific job freedom and flexibility in their daily routine | |
is the gig economy worth it | not every job in the gig economy is the same some can be worth it others less so generally more flexibility is a good thing however it can also in some instances be abused the bottom linethe employment and labor pool has shifted temporary freelance and part time work collectively known informally as the gig economy is now much more common the gig economy offers many benefits including providing workers with more flexibility and allowing companies to cut down on certain costs however it is also sometimes a source of controversy with some pundits associating it with eroding workers rights | |
what are gilt edged securities | gilt edged securities are high grade bonds issued by certain national governments and private organizations in the past these instruments referred to the certificates issued by the bank of england boe on behalf of the majesty s treasury so named because the paper they were printed on customarily featured gilded golden edges by nature a gilt edged denotes a high quality item whose value remains fairly constant over time as an investment vehicle this equates to high grade securities with relatively low yields compared to riskier below investment grade securities for that reason gilt edge securities were once solely issued by blue chip companies and national governments with proven track records of turning profits aside from conventional gilts the british government issues index linked gilts that offer semi annual coupon payments adjusted for inflation government bonds in the u k india and several other commonwealth countries are still known as gilts understanding gilt edged securitiesgilt edged securities are high grade investment bonds offered by governments and large corporations as a method of borrowing funds the issuing institutions typically boast strong track records of consistent earnings that can cover dividend or interest payments in many ways these are the next safest bonds to u s treasury securities the united kingdom and other commonwealth nations still rely on these securities in much the same way the u s uses treasury bonds to raise revenue a conventional gilt issued by the u k government pays the holder a fixed cash payment biannually until maturity at which point the principal is returned in full the coupon payment reflects the market interest rate at the time of issuance and indicates the cash payment that the holder will receive each year similar to treasury securities the duration of gilt edged assets can range from a few years up to 50 years after the 2008 recession large quantities of gilts were created and repurchased by the bank of england in its campaign to jump start economic relief efforts 12about 20 of all u k gilts are held by pension funds 3limitations of gilt edged securitiesalthough gilt edged securities are offered by reliable government bodies and large corporations they present certain drawbacks primarily the bonds tend to fluctuate with interest rates where rate hikes will cause the price of a gilt to decline and vice versa during periods when global economic conditions are improving interest rates tend to rise in this case gilt etfs and mutual funds are likely to fall in value for this reason investors looking to generate substantial returns during periods of economic growth may source better value in index funds the greatest advantage of gilt edge securities is the fact that these instruments are typically tied to interest rates consequently they are ideal investments for retirees seeking reliable returns with minimal risk | |
what does gilt edged mean in business | in business or financial terms gilt edged refers to a financial product of high quality and low risk typically these are securities of the highest value they are most commonly associated with u k government bonds | |
why is it called gilt | u k government bonds known as gilts are termed as such because the original bond certificates had gilded edges hence the name of gilt edged security | |
what are the advantages of gilt edged securities | the primary advantage of gilt edged securities is their safety they are low risk investments with a better asset quality than equities and as such come with low yields which can be seen as a disadvantage to earn more yield one would need to invest in higher risk securities such as stocks or high yield bonds the bottom linegilt edged securities are high quality bonds issued by governments or blue chip companies and are primarily associated with the u k as they are government bonds similar to u s treasuries investors looking for safe securities with low yields can consider investing in gilts | |
what are gilt edged securities | gilt edged securities are high grade bonds issued by certain national governments and private organizations in the past these instruments referred to the certificates issued by the bank of england boe on behalf of the majesty s treasury so named because the paper they were printed on customarily featured gilded golden edges by nature a gilt edged denotes a high quality item whose value remains fairly constant over time as an investment vehicle this equates to high grade securities with relatively low yields compared to riskier below investment grade securities for that reason gilt edge securities were once solely issued by blue chip companies and national governments with proven track records of turning profits aside from conventional gilts the british government issues index linked gilts that offer semi annual coupon payments adjusted for inflation government bonds in the u k india and several other commonwealth countries are still known as gilts understanding gilt edged securitiesgilt edged securities are high grade investment bonds offered by governments and large corporations as a method of borrowing funds the issuing institutions typically boast strong track records of consistent earnings that can cover dividend or interest payments in many ways these are the next safest bonds to u s treasury securities the united kingdom and other commonwealth nations still rely on these securities in much the same way the u s uses treasury bonds to raise revenue a conventional gilt issued by the u k government pays the holder a fixed cash payment biannually until maturity at which point the principal is returned in full the coupon payment reflects the market interest rate at the time of issuance and indicates the cash payment that the holder will receive each year similar to treasury securities the duration of gilt edged assets can range from a few years up to 50 years after the 2008 recession large quantities of gilts were created and repurchased by the bank of england in its campaign to jump start economic relief efforts 12about 20 of all u k gilts are held by pension funds 3limitations of gilt edged securitiesalthough gilt edged securities are offered by reliable government bodies and large corporations they present certain drawbacks primarily the bonds tend to fluctuate with interest rates where rate hikes will cause the price of a gilt to decline and vice versa during periods when global economic conditions are improving interest rates tend to rise in this case gilt etfs and mutual funds are likely to fall in value for this reason investors looking to generate substantial returns during periods of economic growth may source better value in index funds the greatest advantage of gilt edge securities is the fact that these instruments are typically tied to interest rates consequently they are ideal investments for retirees seeking reliable returns with minimal risk | |
what does gilt edged mean in business | in business or financial terms gilt edged refers to a financial product of high quality and low risk typically these are securities of the highest value they are most commonly associated with u k government bonds | |
why is it called gilt | u k government bonds known as gilts are termed as such because the original bond certificates had gilded edges hence the name of gilt edged security | |
what are the advantages of gilt edged securities | the primary advantage of gilt edged securities is their safety they are low risk investments with a better asset quality than equities and as such come with low yields which can be seen as a disadvantage to earn more yield one would need to invest in higher risk securities such as stocks or high yield bonds the bottom linegilt edged securities are high quality bonds issued by governments or blue chip companies and are primarily associated with the u k as they are government bonds similar to u s treasuries investors looking for safe securities with low yields can consider investing in gilts | |
what are gilts | gilts are government bonds in the u k india and commonwealth countries similar to u s treasury securities the term gilt describes a bond with a low risk of default and a low rate of return and the name comes from historical certificates with gilded edges issued by the british government gilts are sensitive to interest rate changes but provide diversification benefits because of their low or negative correlation with stock markets | |
what is the gini index | the gini index determines a nation s level of income inequality by measuring the income distribution or wealth distribution across its population the gini index was developed in 1912 by italian statistician corrado gini the coefficient of the gini index ranges from 0 or 0 to 1 or 100 with 0 representing perfect equality and 1 representing perfect inequality the nation of south africa has the world s worst level of income inequality at a gini index ranking of 63 0 according to the world bank norway had the lowest level of income inequality at 22 7 the level of income inequality in the u s was 39 8 ellen lindner investopediaunderstanding the gini indexa country in which every resident has the same income would have an income gini coefficient of 0 a country in which one resident earned all the income while everyone else earned nothing would have an income gini coefficient of 1 the same analysis can apply to wealth distribution the wealth gini coefficient but because wealth is more difficult to measure than income gini coefficients usually refer to income and are reported simply as the gini coefficient or gini index without specifying that they refer to income wealth gini coefficients tend to be much higher than those for income even in affluent countries the gini index measures net income rather than net worth so a nation s wealth can be concentrated in the hands of a small number of people even if income distribution is relatively equal the gini coefficient is an important tool for analyzing income or wealth distribution within a country or region but it should not be mistaken for an absolute measurement of income or wealth a high income country and a low income country can have the same gini coefficient as long as incomes are distributed similarly within each for example turkey and the united states have nearly identical gini coefficients according to the organisation for economic co operation and development oecd despite turkey s vastly lower gross domestic product gdp per person graphical representation of the gini indexthe gini index is often represented graphically through the lorenz curve as depicted below which shows income or wealth distribution by plotting the population percentile by income on the horizontal axis and cumulative income on the vertical axis the gini coefficient is equal to the area below the line of perfect equality 0 5 by definition minus the area below the lorenz curve divided by the area below the line of perfect equality in other words it is double the area between the lorenz curve and the line of perfect equality the gini index around the worldthe gini coefficient showed a sustained growth in inequality worldwide during the 19th and 20th centuries in 1820 the global gini coefficient stood at 0 50 while in 1980 and 1992 the figure was 0 657 a later estimate by the world inequality lab from 2020 estimates the global gini coefficient at 0 67 source the world bankcovid 19 had a further negative impact on income equality according to the world bank the gini coefficient increased by about 1 5 points in the five years following major epidemics such as ebola and zika economists believe covid 19 triggered an increase of 0 5 points in the gini coefficient from 2019 to 2020 the largest single year increase in global inequality since world war ii below are the income gini coefficients of every country for which the u s central intelligence agency cia world factbook provides data some of the world s poorest countries have some of the world s highest gini coefficients while many of the lowest gini coefficients are found in wealthier european countries however the relationship between income inequality and gdp per capita is not one of perfect negative correlation and the relationship has varied over time michail moatsos of utrecht university and joery baten of tuebingen university show that from 1820 to 1929 inequality rose slightly then tapered off as gdp per capita increased from 1950 to 1970 inequality tended to fall as gdp per capita rose above a certain threshold from 1980 to 2000 inequality fell with higher gdp per capita then curved back up sharply limitations of the gini indexthough useful for analyzing economic inequality the gini coefficient has some shortcomings the metric s accuracy is dependent on reliable gdp and income data shadow economies and informal economic activity are present in every country informal economic activity tends to represent a larger portion of true economic production in developing countries and at the lower end of the income distribution within countries in both cases this means that the gini index of measured incomes will overstate true income inequality accurate wealth data is even more difficult to come by due to the popularity of tax havens that obscure the amounts of money held by the wealthiest another flaw is that very different income distributions can result in identical gini coefficients because the gini attempts to distill a two dimensional area the gap between the lorenz curve and the equality line down to a single number it obscures information about the shape of inequality in everyday terms this would be similar to describing the contents of a photo solely by its length along one edge or the simple average brightness value of the pixels though using the lorenz curve as a supplement can provide more information in this respect it also does not show demographic variations among subgroups within the distribution such as the distribution of incomes across age race or social groups in that vein understanding demographics can be important for understanding what a given gini coefficient represents for example a large retired population pushes the gini higher | |
what country has the highest gini index | south africa with a gini coefficient of 63 0 is currently recognized as the country with the highest income inequality the world population review attributes this massive inequality to racial gender and geographic discrimination with white males and urban workers in south africa earning much better salaries than everyone else | |
what does a gini index of 50 mean | the gini index ranges from 0 to 100 with 0 representing perfect equality and 100 representing perfect inequality a national gini of 50 marks the halfway point and can be viewed as a nation where income is not fairly distributed only 14 countries in the world have a gini of 50 or more as of 2024 | |
is the u s gini coefficient high or low | the united states has a gini coefficient estimated at 39 8 according to the world bank that is a high reading for a developed economy economists blame rising income inequality in the u s on factors such as technological change globalization the decline of unions and the eroding value of the minimum wage the bottom lineif the gap between rich and poor continues to increase the evaluation of the income gap can become more important and the gini index can provide a good starting point when it comes to measuring income inequality knowing the gini index numbers is no panacea but it can quantify and track the direction in which a society is moving which may open the door for dialogue and potential solutions but keep in mind that there are limitations associated with using this measure the coefficient is only as reliable as the data used to calculate it and a single number reading cannot tell the whole story | |
what is the gibraltar pound gip | the gibraltar pound abbreviated as gip is the official currency for the country of gibraltar the gibraltar pound is pegged at par value to the british pound sterling at a fixed exchange rate understanding the gibraltar pound gip the gibraltar pound is issued by the government of gibraltar under the terms of the 1934 currency note act its treasury mints coins in 1 2 5 1 penny 2 pence 5 pence 10 pence 20 pence and 50 pence it prints banknotes in denominations of 5 10 20 50 and 100 the notes and coins in circulation use british names but have different designs they are only accepted in gibraltar the gip is not recognized in the united kingdom although it can be exchanged for british pound sterling notes at a one to one ratio british coins and notes issued by the bank of england are legal tenders in gibraltar however most retail stores in gibraltar unofficially also accept the euro although the royal gibraltar post office does not gibraltar decimalized its currency in 1971 at the same time as the u k replacing the system of 1 pound 20 shillings 240 pence with one of 1 pound 100 new pence gibraltar s economylocated in the south of the iberian peninsula gibraltar is officially a british overseas territory the british military has dominated the economy of gibraltar and its naval dockyard was historically the center of economic activity however military activities and business have declined over the last several decades from 60 in 1984 to an estimated 7 currently 1gibraltar s economy is now based on financial services online gaming navigation and tourism the country remains a significant port in the mediterranean sea with bunkering the supplying of fuel to ships another important industry history of the gibraltar poundfrom 1825 to 1872 the currency situation in gibraltar was complicated with a system based on the spanish real de plata but encompassing british spanish and gibraltarian coins the real was tied to the pound at the rate of one spanish dollar to four shillings four pence equivalent to 21 67 pence today in 1872 however the spanish currency became the sole legal tender of the country then in 1898 the spanish american war made the spanish currency drop dramatically in value as a result the pound was introduced as the official coin of the realm initially in the form of british coins and banknotes though spanish money continued in circulation gibraltar began issuing its own banknotes in 1927 the official birth of the gibraltar pound and its own coins in 1988 the coins were in denominations of 1 2 5 10 20 and 50 pence and 1 pound coins with unique designs and the country s name in 2011 the gibraltar government assumed sole responsibility for the design printing and production of banknotes taking over responsibilities that until then had been the preserve of the british government in 2016 gibraltar s government issued a new 100 banknote bearing the image of sir joshua hassan gibraltar s first chief minister and an architect of the territory s self rule the note was the first in the world to have a holographic foil on safeguard polymer substrate 2in 1975 10 and 20 notes were introduced followed by 50 notes in 1986 new series of notes were issued in 1995 and 2010 11 two pound coins were introduced in 1999 the 2 coin has featured a new design every year since its introduction depicting each of the 12 labors of hercules in 2004 the government of gibraltar minted a new edition of its coins to commemorate the tercentenary of british gibraltar 1704 2004 a new 5 coin was issued in 2010 inscribed with elizabeth ii queen of gibraltar | |
what is give up | give up is a procedure in securities or commodities trading where an executing broker places a trade on behalf of another broker it is called a give up because the broker executing the trade gives up credit for the transaction on the record books a give up usually occurs because a broker cannot place a trade for a client based on other workplace obligations a give up may also happen because the original broker is working on behalf of an interdealer broker or prime broker understanding give up tradesgive up is no longer a common trading practice in the financial markets give up was more common before the development of electronic trading in the floor trading era a broker might not be able to make it to the floor and would have another broker place the trade as a sort of proxy overall the act of performing a trade in the name of another broker is generally part of a prearranged give up agreement prearranged agreements typically include provisions for the give up trade procedures as well as compensation give up trades are not standard practice so payment is not clearly defined without a prearranged agreement give up vs give inacceptance of a give up trade is sometimes called a give in after a give up trade is actually executed it can then be called a give in however the use of the term give in is much less common parties involved in the tradethere are three main parties involved in a give up trade these parties include the executing broker party a the client s broker party b and the broker taking the opposite side of the trade party c a standard trade only involves two parties the buying broker and the selling broker a give up also requires one other person who executes the trade party a in cases where both the original buying and selling brokers are otherwise obligated a fourth party can become involved in a give up trade if the buying broker and the selling broker both ask separate traders to act on their behalf then this scenario would result in a give up on the selling side and the buying side a request is made of party a to place the trade on behalf of party b to ensure the timely execution of a trade on the record books also known as a trade log a give up trade shows the information for the client s broker party b party a executes the transaction on behalf of party b and is not formally noted in the trade record compensation agreements are typically created to manage the provisions of give up trades the executing broker party a may or may not receive the standard trade spread executing brokers are often paid by the non floor brokers either on retainer or with a per trade commission this comprehensive payment to the executing broker may or may not be part of the commission that broker b charges his client example of a give up tradebroker b gets a buy order from a client to buy 100 shares of xyz on the new york stock exchange nyse broker b works upstairs at a large brokerage firm and needs to get the order down to the floor of the nyse to execute the trade in a timely fashion broker b asks floor broker a to place the order floor broker a then buys the stock on behalf of the client of broker b although floor broker a places the trade he must give up the transaction and record it as if broker b made the trade the transaction is recorded as if broker b made the trade even though floor broker a executed the trade | |
what is a give up in prime brokerage | prime brokerages are a bundled group of services that certain banks offer to large clients like institutional investors and hedge funds those clients will use their prime brokerage to execute their trades in a way they outsource the trading so they can focus on their own investment strategy those prime brokerages will then themselves engage in give up trades for their client the fund or institutional investor | |
what does trading away mean | trading away means executing a trade through another broker or dealer one of the benefits of trading away is that the trader is able to place trades with multiple brokers but from one centralized account this can be useful when one broker usually the main broker does not have access to certain markets or instruments | |
what is a master give up agreement | a master give up agreement is an agreement entered into by two parties that facilitates authorized transactions between customers and dealer banks authorized in the agreement 1 the agreement will also come with a compensation agreement which is meant to cover potential losses in the event the prime broker does not accept the give up transaction 2 | |
what is an agu agreement | an agu agreement stands for automatic give up and is an agreement that automatically locks in a transaction in the system where the transaction is logged these agreements like give up agreements are required by parties to be reported to the financial industry regulatory authority finra 3 | |
how do give up trades work | give up trades work when one party is unable to place the trade so they entrust the trade to a third party if john wants to buy abc stock but is unable to place the trade with andy who owns the stock john may have mary make the trade for him delivering the stock from andy to john after john has paid there can be four total parties if in this example andy is also unable to make the trade personally nowadays this is done electronically the bottom linegive up trades were more common when brokers physically made trades these days computers will place the trade in the fastest way and at the best price sometimes this includes giving up a trade but it is not as common as it once was | |
what is the glass ceiling | the term glass ceiling refers to a metaphorical invisible barrier that prevents certain individuals from being promoted to managerial and executive level positions within an organization or industry the phrase is commonly used to describe the difficulties faced by women and minorities when trying to move to higher roles in a male dominated corporate hierarchy the barriers are most often unwritten meaning that these individuals are more likely to be restricted from advancing through accepted norms and implicit biases rather than defined corporate policies understanding the glass ceilingmarilyn loden first coined the phrase glass ceiling while speaking as a panelist at the 1978 women s exposition in new york as a fill in for her employer s only female executive loden was invited to discuss how women were to blame for the barriers preventing them from advancing in their careers instead she spoke about deeper ignored issues that historically kept women from occupying positions of authority the glass ceiling 1this concept was later popularized in a 1986 wall street journal article discussing the corporate hierarchy and how invisible barriers seemed to prevent women from advancing in their careers past a certain level in 2015 the publication reported quoting gay bryant former editor of working woman magazine that the concept goes back to the 1970s and may have originated with two women at hewlett packard 4 the concept expanded in more contemporary times to include minorities in addition to women the equality gap varies between countries and may be driven by cultural stances against women and minority groups from participating in the workforce companies in the united states have responded to the equality gap by focusing on measures to increase diversity this includes hiring personnel specifically tasked with ensuring that women and minorities see improved representation in management level positions by focusing on policies that reduce or eliminate the glass ceiling companies can ensure that the most qualified candidates hold decision making positions in 2023 women accounted for 46 9 of the labor force in the u s but when it came to chief executive positions women held only 30 6 of these roles and 85 8 of chief executives identified as white according to the bureau of labor statistics bls 2research shows that diverse groups are more successful in making decisions than homogeneous ones which has the effect of signaling to companies that eliminating the glass ceiling can positively affect their bottom line 5history of the glass ceilingthe u s department of labor launched the glass ceiling commission in 1991 in response to the growing concern over barriers preventing women and minorities from advancing 3 it was charged with identifying the barriers that exist and policies that companies adopted or could undertake to increase diversity at managerial and executive levels the commission found that qualified women and minorities were being denied the opportunity to compete for or win decision making positions it also found that the perceptions of both employees and employers often included stereotypes that held women and minorities in a negative light 6 | |
when hillary clinton ran for president in 2008 and 2016 she repeatedly spoke of her goal of shattering the highest hardest glass ceiling by becoming america s first female president vice president kamala harris shattered the second highest glass ceiling in the u s when she became the first female and first black and south asian vice president on jan 20 2021 she was also the first woman and first black and south asian attorney general of california as well as the first black woman to be elected district attorney of san francisco 7 | the number of female chief executive officers leading fortune 500 companies in 2023 in the previous year there were 44 of them 8the glass ceiling vs the glass cliffthe glass cliff is a closely related term but refers to a phenomenon wherein women tend to be promoted to positions of power during times of crises when failure is more likely this could occur in fields as diverse as finance politics technology and academia while the more common glass ceiling presents a barrier to reaching the highest executive levels within their respective organizations the glass cliff addresses the tendency to place women who have broken through it into precarious positions making it likely their performance will falter as if they are at risk of falling off a cliff had hillary clinton won the presidential election in 2008 which was the height of the great recession she might have been seen as the victim of the glass cliff the term was coined by professors michelle k ryan and alexander haslam of the university of exeter united kingdom in 2004 ryan and haslam documented this phenomenon extensively in a study of great britain s ftse 100 companies 9example of the glass ceilingthere are numerous examples of instances where individuals encountered and have been able to shatter the glass ceiling as noted above hillary clinton became the first woman to secure the democratic nomination when she ran for president during the 2016 election moreover kamala harris shattered the glass ceiling when she became the first woman to be elected as u s vice president under president joe biden harris was also the first black and south asian person to be elected to the position janet yellen became the first female treasury secretary after being nominated by president biden and sworn in on jan 26 2021 this isn t the first glass ceiling yellen has broken either she was also the first woman to head the federal reserve a role she held during president barack obama s administration 10 | |
what does the phrase glass ceiling mean | the glass ceiling is a metaphor that refers to the barrier that marginalized people such as women and minorities encounter when seeking career advancements | |
what is an example of the glass ceiling | there are many examples of glass ceilings that individuals have broken through kamala harris shattered a glass ceiling when she became the first woman vice president of the united states she is also the first black person and the first person of south asian descent to be elected to the role of vice president from the first u s presidential election in 1789 until the early 21st century no black person served as president it was not until the passage of the voting rights act of 1965 that all black people could vote 11 however in 2008 barack obama became the first african american to be elected president of the united states | |
what does it mean to break the glass ceiling | breaking the glass ceiling means overcoming the barriers set to prevent access to advancement breaking the glass ceiling also includes removing barriers for others experiencing the same struggles | |
where did the saying break the glass ceiling come from | the term glass ceiling was coined by marilyn loden a new york telephone company manager during a 1978 women s exposition 1 | |
does the glass ceiling still exist | the glass ceiling still exists across various industries for different groups of people men still occupy most of the executive positions in corporations and other positions of power although there is more attention given to breaking down these barriers they are still very much present in the workforce the bottom lineglass ceiling is a metaphor that describes how marginalized people such as women and minorities are often restricted in how high they can rise in the workplace in most countries the corporate hierarchy is dominated by white men from wealthy backgrounds for anyone else it can be difficult to reach these top positions more efforts are being made to break down invisible barriers and give managerial and executive level positions to other people there have been signs of progress but inequality is still prevalent | |
what is a glass cliff | the term glass cliff refers to a situation in which women are promoted to higher positions during times of crisis or duress or during a recession when the chance of failure is more likely put simply women in these situations are set up for failure the term was coined by researchers at the university of exeter united kingdom who published research on the 100 companies included in the financial times stock exchange ftse 100 index these researchers found that promoting women to higher positions often comes with negative implications and that being set up for failure is the equivalent of standing on the edge of a cliff if they fail they fall off 1understanding a glass cliffthe glass cliff occurs in many different fields including finance politics technology and academia it addresses the tendency to promote women into problematic situations whether that s organizational or situational this makes it more likely that their performance will falter the metaphor of the glass cliff is that women in this position are at risk of falling off a cliff and failing there are many reasons why women are promoted to more precarious leadership roles than men one is the notion that a struggling company will likely result in a shorter upper management tenure so the position itself is risky placing a woman in that position gives the company someone to blame if she fails to pull the company out of its downward spiral in times of crisis companies don t want to risk the loss of who they believe to be their most valuable high potential talent white men in tough times they are more likely to sacrifice employees who they perceive as less valued and more dispensable women and racial minorities according to chief executive officer ceo of pinsight and author martin lanik it also makes the company look good if the woman fails the company is labeled as being progressive and is free to replace her with a man if she succeeds the company is better off and may even take credit for appointing the right person for the job even with the high chance of failure a glass cliff position can be difficult to turn down because leadership roles are so infrequently offered to women there is no link between leadership potential and gender by keeping women out of top leadership positions companies are missing out on some of the most qualified and talented leaders additionally by allowing the glass cliff phenomenon to persist organizations create an environment where these female leaders struggle to perform to the best of their ability special considerationswomen often struggle when they re placed on a glass cliff that s because there is often a lack of mentors in the workforce there may also be barriers for them to access what is commonly called the good old boys club which is an informal network of connections through which men use their positions of influence by providing favors and information to help other men strategic networking is one of the most common strategies for moving up in the world of business this is where the phrase it s now what you know it s who you know originates women cannot do this without networking with men and seeking out men as mentors but women aren t always welcome in these informal social networks so they miss out on these connections 2although the glass cliff typically refers to the obstacles that women face the term is also commonly used to describe the challenges minorities and other marginalized groups face when they are promoted to leadership roles in the workplace history of the glass cliffin 2004 university of exeter researchers michelle k ryan julie s ashby and alexander haslam studied the 100 companies included in the ftse 100 index which consists of the 100 companies listed on the london stock exchange lse with the highest market capitalizations 3according to the researchers companies that appointed women to their boards were more likely to perform poorly in the preceding five months they claimed that sexism motivated those in power to appoint women to these precarious positions because they don t want to risk tarnishing a prominent man s reputation with failure ryan ashby and haslam followed up their research with another study involving law students which was published in an article called legal work and the glass cliff evidence that women are preferentially selected to lead problematic cases they found that in 2013 alison cook and christy glass researched the likelihood of promotions and leadership tenure of women and racial ethnic minority ceos within american fortune 500 companies using a dataset of all ceo transitions over a 15 year period their findings aligned with the glass cliff theory that occupational minorities white women and men and women of color are more likely than white men to be promoted as corporate ceos that perform poorly in their paper cook and glass wrote their research also revealed that performance declines under the tenure of white women and people of color lead to them being replaced by white men a female ceo succeeded another female ceo in only four of the 608 transitions at fortune 500 companies the researchers coined this phenomenon the savior effect businesses led by female ceos are more likely to be targeted by activist investors according to university of missouri research these investors specifically buy shares with the intention of directing management decisions and must register with the securities and exchange commission sec according to vishal k gupta sandra mortal and daniel b turban their findings revealed that impact of a glass cliffwomen already face many barriers when they are trying to scale the corporate ladder and enter leadership roles the same scenario is also true for other minorities such as people of color the glass cliff creates an unfortunate and impossible situation where they are set up to fail in a workplace for individuals who surpass these obstacles when an organization is in crisis women are often seen as being able to come in and take care of a problem they re effectively handed the mess to clean up according to anna beninger senior director of research and corporate engagement partner at catalyst 7not only is this phenomenon setting women and minorities up for failure but it s also unsustainable for the businesses themselves when a company is in the throes of an organizational crisis it may not have the infrastructure and extra support to facilitate an effective leadership transition if an individual is promoted without any kind of organizational support or development it may result in the illusion of progressiveness or inclusivity for the company when in reality that individual is being tokenized as a minority | |
when a female leader or a person of color ultimately does not save a failing company they usually leave the company and create more disruption and if these individuals fail it further reinforces the stereotypes that exist about women and people of color in leadership | if you feel as though you ve been discriminated against in the workplace you can file a complaint at your local equal employment opportunity commission office in person or by mail make sure you have all the pertinent details handy including dates as well as the contact names and numbers of your employer 8 | |
how to prevent a glass cliff | the first step to prevent the glass cliff is to simply recognize and name it according to ryan ashby and haslam acknowledging the biases that those in leadership may have then providing education around those topics is a good first step women and minorities should research and learn as much as they can about the financial health of their companies staying up to date on insights including the company s stock information and industry trends can help you calculate your risk level tapping into your network is also incredibly important the researchers suggest asking for guidance and insight when assessing the risk of a new promotion during negotiations it is a good idea to ask how success in the role will be defined here are some questions you might consider asking make sure you include risk in your salary negotiations in fact men are four times more likely to negotiate their salaries than women 9 you should always ask for more than the initial offer and use the risk factor of the position as a negotiating point if you decide to accept the position you will likely find yourself in a male dominated environment at this point you can use your unique skills and perspective to your advantage in fact women score better than men in 11 out of 12 emotional intelligence competencies 10finally it s okay to say no many women who face the glass cliff and are not successful do not get asked to lead another company after being ousted it is recommended to not accept a promotion if your research indicates that failure is highly probable and there are warning signs imminent glass cliff vs glass ceilingthe idea that a glass cliff exists for women and people of color arose from another similar concept the glass ceiling which is what most people commonly hear in the professional sphere the glass ceiling refers to an invisible barrier or hurdle that women often face in their professional careers it is also commonly used to describe what many people of color face in similar situations the concept of a glass ceiling was first used by marilyn loden who spoke about the advancement of women in the workplace or lack thereof at the women s exposition in new york in 1978 11 it was popularized almost a decade later by the wall street journal 12 the term came to prominence again when hillary clinton ran for u s president in the 2008 and 2016 elections 13this barrier is often set up to prevent certain women and others from reaching the highest executive or managerial levels within their respective organizations these positions are dominated by men these hurdles are unspoken and unwritten which means implicit biases are what prevent promotion rather than corporate policies individuals who manage to beat the stereotypes and overcome their obstacles by securing leadership roles are said to have shattered the glass ceiling example of a glass cliffthere are a number of examples where prominent women have faced glass cliffs yahoo appointed marissa mayer as ceo in 2012 after it lost significant market share to google she was the company s third ceo in a period of less than a year mayer resigned in 2017 amidst mounting pressure after she failed to change the company s trajectory she was only in the position for about five years critics attributed her performance to her effort rather than to the environment of an underperforming company thomas mcinerny a white male was tapped to replace mayer 14jcpenney hired its first woman ceo in 2018 jill soltau was appointed following a series of consecutive losses store closures and difficulties adapting to the changing needs of its customers in the digital era while only a handful of women have ever served as chief executives of fortune 500 companies she was qualified for the position prior to assuming the role soltau was the president and ceo of joann stores and was a 30 year veteran of the industry soltau was coming into a challenging industry jcpenney had enormous debt leading experts to believe the company wouldn t be able to avoid bankruptcy the covid 19 pandemic proved to be disastrous the company filed for bankruptcy in may 2020 which was sooner than expected in december 2020 soltau was asked to leave her position as ceo 157 | |
when do women encounter a glass cliff | women in leadership roles such as business executives in the corporate world and female candidates for political office are more likely than men to be promoted to leadership roles during periods of crisis or downturn when the chance of failure is highest | |
what do companies hope to gain from a glass cliff | the glass cliff effectively maintains the status quo because it can reinforce the harmful idea that women and people of color can t lead when women or minorities are promoted to leadership positions without the support they need and are not successful the assumption is that women and minorities are not good leaders | |
how can women avoid a glass cliff | companies need to put measures in place to make sure that women and people of color in senior leadership positions have all of the resources they need to be successful while there are things that women and minorities can do to make it less likely that they ll find themselves in an impossible glass cliff scenario the onus is really on companies to prevent this phenomenon from happening companies can offer women specific leadership development tracks and conduct blind hiring to lessen the effects of unconscious bias | |
what is a glide path | glide path refers to a formula that defines the asset allocation mix of a target date fund based on the number of years to the target date the glide path creates an asset allocation that typically becomes more conservative i e includes more fixed income assets and fewer equities as a fund gets closer to the target date | |
how glide path works | a target date fund is a fund offered by an investment company that seeks to grow assets over a specified period of time for a targeted goal e g retirement becoming automatically more conservative as time passes each family of target date funds has a different glide path which determines how the asset mix changes as the target date approaches some have a very steep trajectory becoming dramatically more conservative just a few years before the target date others take a more gradual approach the asset mix at the target date can be quite different as well some target date funds assume that the investor desires a high degree of safety and liquidity because they might use the funds to purchase an annuity at retirement other target date funds assume that the investor holds onto the funds and therefore includes more equities in the asset mix reflecting a longer time horizon target date funds have become popular among those who are saving for retirement they are based on the simple premise that the younger the investor or the longer the time horizon before retirement the greater the risk that one can take on which increases expected returns accordingly a young investor s portfolio for example should contain mostly equities in contrast an older investor would hold a more conservative portfolio with fewer equities and more fixed income investments types of glide pathsan investor who uses a declining glide path gradually reduces their allocation of equities each year they get closer to retirement for example at age 50 an investor who holds 40 equities in a portfolio may reduce their equity allocations by 1 each year they would then increase their allocation of safer assets such as treasury bills a portfolio that uses a static glide path maintains the same allocations for instance an investor may hold 65 equities and 35 bonds if these allocations deviate due to price changes in the assets the portfolio is re balanced portfolios that use this approach initially have a larger allocation of bonds compared to equities the equity allocation increases as the bonds mature as long as the stocks in the portfolio don t decrease in value for example an investor s portfolio might start with an allocation of 70 bonds and 30 equities after a large portion of the bonds matures the portfolio may hold 60 equities and 40 bonds | |
what is a global bond | a global bond sometimes referred to as a eurobond is a type of bond issued and traded outside the country where the currency of the bond is denominated understanding global bonds | |
when multinational corporations and sovereign entities decide to raise large capital they may choose to issue global bonds global bonds are international bonds that are offered simultaneously in various capital markets including europe asia and america these bonds may have a fixed or floating rate with maturities ranging from one to 30 years | some global bonds are denominated in the currency of the company s country base such as the yen for japanese companies and the euro for a german corporation other global bonds are denominated in the currency of the country where the bond is issued returning to the earlier example the u s corporation could sell a bond on a japanese marketplace and denominate it in yen due to the fluctuation of exchange rates investors typically invest in foreign fixed income that brings in modest returns and fluctuates slightly global bonds are seen as a way to diversify a portfolio that is limited to a specific denomination or one particular country s bond such as a u s bond because this bond will have less correlation to the foreign fixed income bond global bonds are grouped into developed country bonds and emerging market bonds bonds issued by corporations and governments from developed countries are issued with differing maturities and credit qualities some of these bonds are u s dollar denominated however most are denominated in the currencies of their home countries emerging market bonds are typically issued by a sovereign government not corporations these bonds are dollar denominated and offer high interest rates due to the perceived higher level of risk of a bond investment issued by an economically unstable country global bond vs eurobondglobal bonds are sometimes also called eurobonds but they have additional features a eurobond is an international bond that is issued and traded in countries other than the country in which the bond s currency or value is denominated these bonds are issued in a currency that is not the domestic currency of the issuer a french company that issues bonds in japan denominated in u s dollars has issued a eurobond more specifically a eurodollar bond other types of eurobonds are the euroyen and euroswiss bonds a global bond is similar to the eurobond but can also be traded and issued simultaneously in the country whose currency is used to value the bond drawing from our eurobond example above an example of a global bond will be one in which the french company issues bonds denominated in the u s dollar but offers the bonds in both japan and u s markets | |
what is a global depositary receipt gdr | a global depositary receipt gdr is a negotiable financial instrument issued by a depositary bank it represents shares in a foreign company and trades on the local stock exchanges in investors countries gdrs make it possible for a company the issuer to access investors in capital markets beyond the borders of its own country gdrs are commonly used by issuers to raise capital from international investors through private placement or public stock offerings a global depositary receipt is very similar to an american depositary receipt adr except that an adr only lists shares of a foreign company in u s markets understanding global depositary receipts gdrs a global depositary receipt is a type of bank certificate that represents shares of stock in an international company the shares underlying the gdr remain on deposit with a depositary bank or custodial institution while shares of an international company trade as domestic shares in the country where the company is located global investors located elsewhere can invest in those shares through gdrs using gdrs companies can raise capital from investors in countries around the world gdrs can in theory be denominated in any currency but are nearly always in u s dollars since gdrs are negotiable certificates they trade in multiple markets and can provide arbitrage opportunities to investors gdrs are generally referred to as european depositary receipts or edrs when european investors wish to trade locally the shares of companies located outside of europe gdr transactions tend to have lower costs than some other mechanisms that investors use to trade in foreign securities example of a gdra u s based company that wants its stock to be listed on the london and hong kong stock exchanges can accomplish this via a gdr the u s based company enters into a depositary receipt agreement with the respective foreign depositary banks in turn these banks package and issue shares to their respective stock exchanges these activities follow the regulatory compliance regulations for both of the countries a depositary is an independent third party entity such as a bank that may act as a safekeeping facility and fiduciary for instance a depositary bank can provide stock related services for a depositary receipt program gdr characteristicsgdrs are exchange traded securities that represent ownership of shares in a foreign company where those actual shares are traded abroad different gdrs may also have specific characteristics that differ from one to the next these may include special considerationsa gdr distributed by a depositary bank represents a particular number of underlying shares anywhere from a fraction to multiple shares in a specific international company the particular share makeup for a gdr depends on how attractive an investment it will make to local investors for instance in the u s a depositary bank would want to create gdrs with the number of shares or fractions thereof and associated u s dollar value that u s investors might be most comfortable with the depositary bank first buys the shares of the international company or receives them from an investor who already owns them it then bundles a certain number of them this bundle is represented by a gdr the gdr is then issued by the depositary bank on a local stock exchange the underlying shares remain on deposit with the depositary bank or custodian bank in the international country the trading process involving gdrs is regulated by the exchange on which they trade for example in the u s global depositary receipts are quoted and trade in u s dollars they also pay dividends with u s dollars they re subject to the trading and settlement process and regulations of the exchange where their transactions take place typically gdrs are offered to institutional investors via a private offer due to the fact that they can take advantage of exemptions from registration under the securities act of 1933 this makes gdrs an efficient and cost effective way to access cross border capital in fact because of their flexibility and efficiencies issuers from regions such as the middle east and africa asia pacific latin america as well as europe have increased their use of gdr programs to help them achieve the objectives they have for raising capital 1trading gdrsinternational companies issue gdrs to attract capital from foreign investors gdrs trade on the investors local exchanges while offering exposure to an international marketplace a custodian depositary bank has possession of the gdrs underlying shares while trades take place ensuring a level of protection and facilitating participation for all involved brokers who represent buyers manage the purchase and sale of gdrs generally the brokers are from the home country and operate within the foreign market the actual purchase of the assets is multi staged involving a broker in the investor s country a broker located within the market of the international company a depositary bank representing the buyer and a custodian bank brokers can also sell gdrs on an investor s behalf an investor can sell them as is on the proper exchanges or the investor can convert them into regular stock for the company additionally they can be canceled and returned to the issuing company traders dealing in gdrs often compare the for example u s dollar price of the gdr with the u s dollar equivalent price of the shares trading on the international company s domestic exchange they ll typically buy the less expensive security and sell the other eventually this arbitrage trading activity causes the underlying shares and the gdrs to reach parity due to the trading activity called arbitrage a gdr s price closely tracks that of the international company s stock on its home exchange advantages and disadvantages of gdrseasy to track and tradeusually denominated in u s dollarsregulated by local exchangesoffers international portfolio diversificationmore complex taxationlimited selection of companies offering gdrsinvestors exposed indirectly to currency and geopolitical riskpotential lack of liquiditygdrs vs adrsglobal depositary receipts allow a company to list its shares in more than one country outside of its home country for example a chinese company could create a gdr program that issues its shares through a depositary bank intermediary into the london market and the united states market each issuance must comply with all relevant laws in both the home country and foreign markets individually on the other hand an american depositary receipt which also represents shares of an international company lists only on u s stock exchanges to offer adrs a u s bank will purchase shares on a foreign exchange the depositary bank will hold the underlying shares and issue an adr for domestic trading sponsored adrsa bank issues a sponsored adr on behalf of a foreign company the bank and the business enter into a legal arrangement usually the foreign company pays the costs of issuing an adr and retains control over it while the bank handles the transactions with investors unsponsored adrsa bank may also issue an unsponsored adr this certificate represents no direct involvement participation or even permission from the foreign company theoretically there could be several unsponsored adrs for the same foreign company issued by different u s banks these different adrs could also offer varying dividends with sponsored programs there is only one adr issued by the depositary bank working with the foreign company | |
what is the meaning of global depositary receipt | a global depositary receipt is a negotiable certificate issued by a bank the certificate represents shares in a foreign company traded on a local stock exchange gdrs give companies access to greater capital and investors the opportunity to invest in the equity of foreign companies | |
what are some features of gdrs | gdrs can be listed on multiple global stock exchanges they also provide investors with the benefits and rights of the underlying shares which could include dividends gdrs trade like shares and can be bought and sold throughout the day via a standard brokerage account | |
what is the difference between an adr and a gdr | an american depositary receipt represents shares in a foreign company and is listed only on american exchanges a gdr represents shares in a company being on various foreign stock exchanges | |
what is an example of a gdr | one example of a gdr is the american oil and gas company phillips 66 nyse psx in addition to trading domestically it has depositary receipts listed on exchanges in brazil p1sx34 germany r66 vienna psxc and london 0khz l among others 4567the bottom linefor u s investors global depositary receipts offer a way to own equity in foreign companies while trading its representative shares on a local stock exchange certainly gdrs have their risks including home country economic and political risk currency risk and liquidity risk however gdrs also offer noteworthy benefits that include the potential for a globally diversified portfolio the ability to trade clear and settle transactions according to local regulations no cross border custody safekeeping charges and dividend payments in u s dollars | |
what is the global financial stability report gfsr | the global financial stability report gfsr is a semiannual report by the international monetary fund imf that assesses the stability of global financial markets and emerging market financing it is released twice per year in april and october understanding the global financial stability report gfsr the gfsr focuses on current conditions especially financial and structural imbalances that could risk an upset in global financial stability and access to financing by emerging market countries it emphasizes the ramifications of financial and economic imbalances that are highlighted in one of the imf s other publications the world economic outlook topics covered in the gfsr usually include systemic risk assessments in worldwide financial markets worldwide debt management emerging economic markets and current economic crises that could affect finances worldwide 1the global financial stability report gfsr replaced two previous reports by the imf the annual international capital markets report and the quarterly emerging market financing report 2 the purpose of replacing them was to provide a more frequent assessment of the worldwide financial markets and to focus on emerging market financing in a global context in addition to assessing the condition of worldwide markets the gsfr also issues recommendations for central banks policymakers and others who supervise global financial markets the most recent gsfr released in april 2021 warns that there is a pressing need to act to avoid a legacy of vulnerabilities while avoiding a broad tightening of financial conditions it goes on to state that the actions taken during the pandemic may have unintended consequences such as stretched valuations and rising financial vulnerabilities and that the recovery is also expected to be asynchronous and divergent between advanced and emerging market economies 3gfsr example april 2019the april 2019 gfsr consisted of a front matter and two chapters the first chapter discussed the growth of short term and medium term risks to global financial stability since the october 2018 gfsr the vulnerabilities listed in the gsfr ranged from the financial sector nexus in the euro area to problems in the chinese economy to the risks prevalent in the housing market 4the interconnected nature of the global economy meant that these vulnerabilities could present significant risks in the future for example china s economy remained a tightrope between supporting near term growth and preventing excessive leverage within the economy through regulatory tightening given china s manufacturing prowess and the inclusion of its currency in imf s global benchmark indices these problems could reverberate throughout the world economy the second chapter of the gsfr report dealt with the risks prevalent in the housing market according to the gsfr the downside risks in the housing market at that time included the growth of excessive credit and tighter financial conditions in the years ahead 4 | |
what is a global fund | a global fund is a fund that invests in companies located anywhere in the world including the investor s own country a global fund seeks to identify the best investments from a global universe of securities global funds may also be passively managed a global fund can be focused on a single asset class or allocated to multiple asset classes understanding global fundsa global fund provides investors with a diversified portfolio of global investments investing in international securities can increase an investor s potential return with some additional risks a global fund can help to mitigate some of the risks and fears investors may have when considering international investments around the globe investment regions are usually described as developed markets emerging markets and frontier markets each category includes countries with their own individual characteristics and risks developed markets represent companies that have mature economies and efficient infrastructures specifically for financial market transactions emerging markets often provide the greatest opportunity for return as they are some of the largest and fastest growing economies in the world frontier markets will offer the highest risk as they are the least developed a global fund can invest in any region or country in the world it may choose a specific concentration or it may invest broadly across asset classes and countries global funds can be offered as closed end mutual funds open end mutual funds or exchange traded funds etf global fund investinginvestors can expand their investable universe globally to seek out greater returns but investing in global securities can also increase risks therefore global funds provide a leading investment option because their diversified investments can mitigate risk and also allow for the identification of top performing investments to further manage risk while attempting to generate a higher return investors can choose to invest in both global debt and equity funds or hybrid funds which invest in both asset classes actively managed global funds are a popular choice for investors however passively managed index funds can also provide broad market exposure with diversification benefits while there are many funds in the global debt category some high profile representative funds include the vanguard total international bond index fund vtabx which has over 91 9 billion in net assets as of late q2 2022 the american funds capital world bond fund cwbfx which has over 14 7billion in net assets and the pimco international bond fund pforx with net assets of over 12 4 billion 123while each global debt fund has different features and allocations each invests in various diversified portfolios of u s and non u s fixed income securities major funds in the large cap global equity space include the american funds new perspective fund anwpx with net assets of over 132 5 billion as of q2 2022 american funds capital world growth and income fund cwgiz with net assets 117 billion and first eagle global fund sgenx which manages over 49 billion worth of assets 456global equity funds buy stocks domestically and around the world and come in hundreds of combinations of guiding philosophies allocation strategies and management styles | |
what is the global industry classification standard gics | the global industry classification standard gics is a method for assigning companies to a specific economic sector and industry group that best defines its business operations it is one of two rival systems that are used by investors analysts and economists to compare competing companies gics was developed jointly by morgan stanley capital international msci and standard poor s the gics methodology is used by the msci indexes which include u s and international stocks as well as by a large portion of the professional investment management community 1understanding gicsa company s industry classification is key to an investor whose aim is to create a diversified portfolio or to identify competitors of a company in the same industry the top of the gics hierarchy defines 11 economic sectors these are further divided into 24 industry groups then into 68 industries and finally into 157 sub industries each stock has a code to identify it at all four of these levels the 11 sectors are 1a company is assigned gics classification codes at the sub industry levels by standard poor s and msci according to their definition of the company s principal business a company s main source of revenue is the most important factor in determining its principal business activity other factors such as earnings analysis and market perception are also considered since the gics s creation in 1999 a number of revisions have added deleted or refined industry groups sub industries and industries a real estate sector was added in 2016 the telecommunications sector was renamed the communication services sector in 2018 at the same time the sector was expanded to include some media and entertainment interests previously classified under the consumer discretionary sector as well as some interactive media and services interests previously classified under the information technology sector | |
how gics is used | all told more than 26 000 stocks worldwide have been classified by gics accounting for more than 95 of the world s listed market capitalization gics is used by portfolio managers to identify and analyze stocks and their competitors 2it also is used for benchmarking the msci indexes morgan stanley estimates that more than 14 5 trillion in assets under management are benchmarked to its msci indexes many of which are sector specific 3gics competes with the industry classification benchmark icb system which is maintained by dow jones and london s ftse group the largest difference between icb and gics lies in how consumer businesses are classified at the sector level with the icb companies doing business with consumers are divided into providers of goods and providers of services with the gics companies are labeled as cyclical or noncyclical or between discretionary spending and staples at the lower levels there are more differences but their impact is not hugely significant for example in the icb coal companies are found in basic materials but under the gics these companies are classified in energy whether one of the systems is superior is a matter of preference the end user does not really have a choice anyway as all of the major indexes associate their listed stocks with one or the other in practice most of the same sector and industry designations exist in both gics and icb standards | |
is classification out of date | in recent years the relevance of gics and icb classification has been questioned many of our current economic categories and measurements are products of the industrial age when the companies that were growing and shaping the world were giants with huge physical plants and plenty of material products today s giants cross boundaries between hardware and software and beyond apple makes phones and computers and sells entertainment products amazon creates hardware produces entertainment programming sells cloud services and delivers just about everything general electric has interests in nbc telemundo and universal pictures critics argue that it s time to move from a vertical industry emphasis to one centered on business models instead by updating the global industry classification standard to reflect the wider scope of today s corporate giants new measures and standards would help investors customers and employees manage new strategic landscapes with greater insight | |
what are global investment performance standards gips | global investment performance standards gips are a set of voluntary standards used by investment managers throughout the world to ensure the full disclosure and fair representation of their investment performance the goal of the standards is to make it possible for investors to compare one firm s performance against that of another firm the global investment performance standards were created by the cfa institute a global association for investment management professionals and are governed by the gips executive committee global investment performance standards gips are intended to enable investors to compare investment firms worldwide | |
how global investment performance standards gips work | the global investment performance standards are a set of standardized industry wide ethical principles that guide investment firms on how to calculate and present their investment results to prospective clients according to the cfa institute because the standards are voluntary investment firms can choose to comply with them or not however because the standards are in wide use worldwide complying with them makes it easier for investment firms to do business in multiple countries saving them the time of having to apply different performance calculation measures for investment presentations depending on the locale the cfa institute says the standards investment management companies often make a point of indicating that they are gips compliant that can lend additional credibility to companies especially those that do business outside the more mature markets of north america and europe history of global investment performance standards gips the forerunner of the global investment performance standards was the association for investment management and research performance presentation standards aimr pps created in 1987 this was a set of voluntary performance guidelines for investment management firms in the united states and canada in response to the need for a more international set of guidelines the global investment performance standards were first introduced in 1999 in 2005 the cfa institute as the association for investment management and research had been renamed approved a revised set of guidelines to create a single global standard of investment performance and replace the previous country specific performance standards the most recent edition of global investment performance standards was released on june 30 2019 and goes into effect on jan 1 2020 according to the cfa institute the global investment performance standards are currently used in more than 40 markets globally and 84 of the top 100 asset management firms worldwide claim compliance with the gips standards for all or part of their business combined the top 100 gips compliant firms represent more than us 50 trillion of assets under management | |
what is a global macro strategy | a global macro strategy is a hedge fund or mutual fund strategy that bases its holdings primarily on political forecasts of various countries or the macroeconomic principles that have high impact on the economies of those countries holdings may include long and short positions in various equity fixed income currency commodities and futures markets for example if a manager believes the united states is headed into a recession he may short sell stocks and futures contracts on major u s indices or the u s dollar he may also see a big opportunity for growth in singapore taking long positions in that country s assets global macro funds are normally actively managed which means they have a higher investment threshold and higher fees | |
how the global macro strategies work | global macro funds build portfolios around predictions and projections of large scale events on the country wide continental and global scale implementing opportunistic investment strategies to capitalize on macroeconomic and geopolitical trends global macro strategists make forecasts and analyze trends involving factors such as global macro funds are considered among the least restricted funds as they generally place any type of trade they choose using almost any type of security types of global macro strategyglobal macro funds generally use a combination of currency based interest rate based and stock index based trading strategies within the context of currency strategies the funds typically seek opportunities based on the relative strength of one currency to another funds monitor and project economic and monetary policies around the world and make highly leveraged currency trades using futures forwards options and spot transactions interest rate strategies usually invest in sovereign debt making directional bets as well as relative value trades a fund manager generally concentrates on monetary policy its economy and political situation some of the vehicles they may choose in this strategy include u s treasury and european debt instruments they may also invest in government debt from other developed and emerging countries stock or equity index trading under a global macro strategy analyzes the equity or commodity index of a specific country using futures options and exchange traded funds etfs fund managers generally try to create portfolios that outperform the index during lower interest rate environments they mainly focus on liquid assets that can be easily traded when there is uncertainty these assets only come with market risks which are expected this means there are no other risks liquidity or credit risks involved certain global macro funds employ strategies focused on only emerging market countries general types of global macro fundsthere are a variety of generalized global macro fund types that exist most of which aim to profit on systemic and market risk factors discretionary global macro funds construct portfolios at the asset class level based on a top level view of the global markets this type of global macro fund is considered the most flexible as managers can go long or short with any type of asset anywhere in the world commodity trading advisor cta global macro funds use various investment products but rather than creating portfolios based on top level views these funds use price based and trend following algorithms to help construct portfolios and execute the fund s trades systematic global macro funds use fundamental analysis to build portfolios and execute trades using algorithms this type of fund is essentially a hybrid of discretionary global macro and cta funds global macro hedge fundsthese funds are generally actively managed as noted above they try to profit off broad changes that result from both political and economic factors they can be fairly diversified offering exposure to different assets and instruments because they are actively managed investors can expect higher investment thresholds and higher fees associated with these funds institutional investor announced its hedge fund industry award nominees for 2019 which included a few global macro funds new york based element capital management the report cited jumped 17 3 since 2018 under jeffrey talpins the fund uses a multi process investment approach by combining macro fundamental systematic and relative value analysis as of november 2018 element capital management had 55 88 billion in assets under management bridgewater assets is another name cited by the publication posting a jump of 14 6 in its pure alpha strategy the firm reported 124 7 billion in assets under management as of 2018 | |
what is a global macro hedge fund | global macro hedge funds are actively managed funds that attempt to profit from broad market swings caused by political or economic events global macro hedge funds are market bets around economic events investors use financial instruments to create short or long positions based on the outcomes they predict as a result of their research a market bet on an event can cover a wide variety of assets and instruments including options futures currencies index funds bonds and commodities the goal is to find the right mix of assets to maximize returns if the predicted outcome occurs understanding global macro hedge fundsglobal macro hedge funds may position themselves around a particular outcome or they can simply set up positions to profit from global market volatility when they do not have confidence in a prediction but know that a binary outcome is imminent portfolio managers who use global macro strategies typically focus on currency interest rate and stock index strategies global macro hedge fund exampleexamples of global hedge fund activity were evident before the brexit vote in 2016 when the united kingdom voted to exit the european union eu global macro hedge funds that felt confident that britain would vote to leave the eu took long positions in safe assets such as gold and chose short positions against european stocks and the british pound global macro hedge funds that were uncertain about the outcome took long positions in safe havens and other instruments that payout during market volatility some undoubtedly guessed wrong and took losses on the long position in european stock indexes as the british pound and other assets dipped immediately after the results were known because the funds are typically actively managed they tend to require a bigger initial investment and bigger lifetime fees than passively managed funds special considerationsglobal macro hedge funds offer investors exposure to these high level bets that span assets and instruments they offer a form of diversification that is different from most equities making them attractive to investors who seek protection from global financial events that can drag down stock and bond returns in general typically it has been difficult for an individual investor to recreate this type of strategy because of the capital required and the complexity involved in managing all the positions across asset classes and platforms on the downside global macro hedge funds have high investment thresholds and even higher fees exchange traded funds etfs have also made it possible for investors to create similarly broad market bets without paying the same level of fees | |
what is a global recession | a global recession is an extended period of economic decline around the world a global recession involves more or less synchronized recessions across many national economies as trade relations and international financial systems transmit economic shocks and the impact of recession from one country to another the international monetary fund imf uses a broad set of criteria to identify global recessions including a decrease in per capita gross domestic product gdp worldwide according to the imf s definition this drop in global output must coincide with a weakening of other macroeconomic indicators such as trade capital flows and employment 1understanding global recessionsmacroeconomic indicators have to wane for a significant period of time to classify as a recession in the united states it is generally accepted that gdp must drop for two consecutive quarters for a true recession to take place based on analysis by the national bureau of economic research nber which is considered the national authority in declaring and dating business cycles 2 for global recessions the imf plays a role similar to the nber while there is no official definition of a global recession the criteria established by the imf carry significant weight because of the organization s stature across the globe unlike the nber the imf does not specify a minimum length of time when examining global recessions in contrast to some definitions of a recession the imf looks at additional factors beyond a decline in gdp there must also be a deterioration of other economic factors which include trade capital flows industrial production oil consumption the unemployment rate per capita investment and per capita consumption 1ideally economists would be able to simply add the gdp figures for each country to arrive at a global gdp the vast number of currencies used throughout the world makes the process considerably more difficult though some organizations use exchange rates to calculate the aggregate output the imf prefers to use purchasing power parity ppp that is the amount of local goods or services that one unit of currency can buy rather than the amount of foreign currency it can buy in its analysis 3up until 2020 according to the imf there have been four global recessions since world war ii beginning in 1975 1982 1991 and 2009 in 2020 the imf declared a new global recession which it dubbed the great lockdown caused by the widespread implementation of quarantines and social distancing measures during the covid 19 outbreak this is the worst global recession on record since the great depression 14the impact and severity of the effect of a global recession on a country vary based on several factors for example a country s trading relationships with the rest of the world determine the scale of impact on its manufacturing sector on the other hand the sophistication of its markets and investment efficiency determine how the financial services industry is affected the interconnection of trade relations and financial systems among countries can help to spread an economic shock in one region into a global recession this process is known as contagion example of a global recessionthe great recession was an extended period of extreme economic distress observed around the world between 2007 and 2009 world trade plunged by over 15 between 2008 and 2009 during this recession the scale impact and recovery of the downturn varied from country to country the u s experienced a major stock market correction in 2008 after the housing market collapsed and lehman brothers filed for bankruptcy 5 economic conditions had already turned down by the end of 2007 and major indicators such as unemployment and inflation hit critical levels with the collapse of the housing bubble and ensuing financial crisis the situation improved a few years after the stock market bottomed in 2009 but other nations experienced much longer roads to recovery over a decade later the effects can still be felt in many developed nations and emerging markets according to economic research conducted for the nber the united states would have suffered limited shocks to its economy if the 2008 recession had not originated within its borders 6 this is mainly because it has limited trading relationships with the rest of the world in comparison to the size of its domestic economy on the other hand a manufacturing powerhouse such as germany would have suffered regardless of the robustness of its internal economy because it has a vast number of trade linkages with the rest of the world | |
what is a global registered share grs | a global registered share grs or a global share is a security that is issued in the united states but it is registered in multiple markets around the world and trades in multiple currencies with global shares identical shares may trade on different stock exchanges and in various currencies across country borders without needing to be converted into local currencies all holders of global shares as with any other shareholder have equal rights such as voting percentage of dividends and so forth in the issuing corporation understanding global registered shares grss global shares are similar to ordinary shares except that investors can trade them on stock exchanges around the world in different currencies for example if a publicly traded company issues shares in dollars on the new york stock exchange nyse and issues the same security in pounds on the london stock exchange or vice versa then it is issuing global shares global registered share grs vs international depository receipt idr and american depository receipt adr global shares are different from the more popular international depositary receipts idrs idrs are negotiable certificates issued by a bank that represent ownership of stock in a foreign company held by the bank in trust in the u s idrs are known as american depositary receipts adrs the main difference between adrs and global shares is that adrs are issued only by u s banks for foreign stocks that are traded on a u s exchange the underlying security of an adr is held by an overseas branch of an american financial institution rather than by a global institution adrs have become known as an efficient way to buy shares in a foreign company and obtain dividends and capital gains in u s dollars j p morgan created and launched the first adr for london s famed department store selfridges the founder of selfridges harry gordon selfridge was american this first ever adr was listed on the new york curb exchange a precursor to the american stock exchange amex on april 29 1927 1in europe idrs are known as global depositary receipts gdrs gdrs are bank certificates that are issued in multiple countries for shares in a foreign company the shares of a gdr trade as domestic securities that represent a foreign non u s interest gdrs may be used by private markets to raise capital that is denominated in either american dollars or euros advantages and disadvantages of global registered sharesa global share allows for cross market portability while generally costing less than other instruments of its type because of increasing globalization securities might trade in multiple markets going forward which could make the concept of adrs less valid but would make global shares more attractive as trading moves toward an around the clock timetable various stock markets and clearinghouses could consolidate which would make global shares more convenient moreover the regulatory structures of different markets could become more aligned which would make it less necessary for securities to comply with different local regulations finally a global fungible security is likely best suited to track liquidity around the world even with their potential benefits very few global shares have been launched since they appeared on the finance scene most companies that list securities in the u s want access to the broadest range of u s investors possible some securities experts believe that moving from an adr to a global share would do just the opposite reduce liquidity instead of enhance it another potential problem is whether the global trading system would be able to handle widespread trading of global shares because trading is still influenced by regulatory bodies that are national not international before a global share can be launched operators of the home country s clearinghouses must work closely with a u s counterpart in order to harmonize their listing requirements with the securities and exchange commission sec new structures would need to be built one country at a time some critics believe that the cost of creating global shares programs would be too great thus offsetting any benefits and that too much would need to change too fast in order for global shares to work effectively in the near term yet proponents of global shares say that it is only a matter of time before more businesses replace their adrs with a single global security mainly because of how cheap they are to trade 2there is always comfort in the familiar adrs have enjoyed a long lucrative history and they continue to be u s based investors tool of choice for listing foreign stock in america although no one knows what may come of grss as a trading tool going forward the comfortable tradition of adrs combined with the problems of balancing local market regulations with u s rules could well deter finance managers from issuing quantities of global shares any time soon a history of global sharesforeign issuers have been keen to list securities on the nyse from the exchanges earliest days as well as registering them with the sec listing stock in the u s makes sense for foreign companies because it offers enhanced scope and liquidity by increasing the number of potential purchasers of the shares being offered for foreign companies that already have a large number of shareholders substantial assets or operations in the u s the need for a u s listing is even more pressing however listing securities in the u s has never been stress free for non u s companies to start foreign companies incur huge initial and extensive ongoing costs when listing in the u s then they need to restate their financials in accordance with u s generally accepted accounting principles gaap or be prepared to discuss and quantify the material differences between the accounting principles of their home country and u s gaap moreover these issuers become subject to continual reporting requirements they also are faced with certain rules about how they may conduct their business including limitations in dealing with the press even in their home countries 3 | |
what is globalization | globalization refers to the growing interconnection of nations economies it represents the flow of financial products goods technology information and jobs across national borders and cultures in economic terms it describes an interdependence of countries around the globe fostered through free trade alex dos diaz investopediaunderstanding globalizationcorporations gain a competitive advantage on multiple fronts from globalization they can reduce operating costs by manufacturing abroad buy raw materials more cheaply because of the reduction or removal of tariffs and most of all gain access to millions of new consumers globalization is a social cultural political and legal phenomenon on the one hand globalization has created new jobs and economic growth through the cross border flow of goods capital and labor on the other hand this growth and job creation are not distributed evenly across industries or countries specific industries in certain countries such as textile manufacturing in the united states or corn farming in mexico have suffered severe disruption or outright collapse as a result of increased international competition globalization s motives are idealistic as well as opportunistic but the development of a global free market has benefited large corporations based in the western world its impact remains mixed for workers cultures and small businesses around the globe in both developed and emerging nations globalization has grown at an unprecedented pace with public policy changes and communications technology innovations cited as the two main driving factors the history of globalizationglobalization is not a new concept traders traveled vast distances in ancient times to buy commodities that were rare and expensive for sale in their homelands the industrial revolution brought advances in transportation and communication in the 19th century that eased trade across borders the think tank peterson institute for international economics piie states globalization stalled after world war i nations moved toward protectionism as they launched import taxes to guard their industries in the aftermath of the conflict this trend continued through the great depression and world war ii until the u s took on an instrumental role in reviving international trade 1one of the critical steps in the path to globalization came with the north american free trade agreement nafta signed in 1993 2 one of nafta s many effects was to give american auto manufacturers the incentive to relocate a portion of their manufacturing to mexico where they could save on the costs of labor 3 nafta was replaced in 2020 by the united states mexico canada agreement usmc 4governments worldwide have integrated a free market economic system through fiscal policies and trade agreements in the 20th century the core of most trade agreements is the removal or reduction of tariffs this evolution of economic systems has increased industrialization and financial opportunities in many nations governments now focus on removing barriers to trade and promoting international commerce pros and cons of globalizationa larger market for goods and servicescheaper consumer pricesoutsourcing can benefit domestic firms and foreign laborincreased standard of livingconcentrates wealth in richer countriessome poorer countries can be left behindlabor and the physical and intellectual resources of poorer countries can be exploitedregions and cultures lose their uniqueness and products available around the world can become homogeneous | |
why is globalization important | globalization is important as it increases the size of the global market and allows more and different goods to be produced and sold for cheaper prices it is also important because it is one of the most powerful forces affecting the modern world so much so that it can be difficult to make sense of the world without understanding globalization for example many of the largest and most successful corporations in the world are in effect truly multinational organizations with offices and supply chains stretched right across the world these companies would not be able to exist if not for the complex network of trade routes international legal agreements and telecommunications infrastructure that were made possible through globalization important political developments such as the ongoing trade conflict between the u s and china are also directly related to globalization | |
is globalization good or bad | it depends proponents of globalization will point to the dramatic decline in poverty throughout the world for more than two decades after around year 2000 which many economists attribute in part to increased trade and investment between nations 6 similarly they will argue that globalization has allowed products and services such as cellphones airplanes and information technology to be spread far more widely throughout the world on the other hand critics of globalization will point to the negative impact it has had on specific nations industries which might face increased competition from international firms globalization can also have negative environmental impacts due to economic development industrialization and international travel |
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