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what is the uniform partnership act upa | the uniform partnership act upa provides governance for business partnerships in several u s states the upa also offers regulations governing the dissolution of a partnership when a partner dissociates over the years several amendments have been added to the uniform partnership act upa the revised act and revisions are sometimes referred to as the revised uniform partnership act rupa understanding the uniform partnership act upa the implementation of the upa operates as a statute which is a rule passed by legislators as opposed to government agencies the uniform partnership act was created in 1914 by the national conference of commissioners on uniform state laws nccusl as of the latest iteration of the act 44 states and districts in the u s abide by it including the district of columbia puerto rico and the u s virgin islands 1 the uniform partnership act only applies to general liabilities and limited liability partnerships llps it does not apply to limited partnerships lps the intended goal of the uniform partnership act is to provide guidance to various business relationships this typically applies to small businesses and loose partnerships as larger businesses have detailed agreements in place that govern any changes in a business the act governs how a partnership is created the fiduciary duties of the partnership and its partners and defines partnership assets and liabilities uniform partnership act detailsone of the most important aspects of the upa states that when one partner in a business leaves a majority interest of the remaining partners can agree to continue the partnership within 90 days of the dissociation the uniform partnership act effectively saved partnerships from dissolution following a partner s dissociation 2since the first uniform partnership act was drafted in 1914 it has been revised many times most recently in 1997 amendments in 2011 and 2013 were added to the act to provide clarification to some of the language in the 1997 version 1since 1892 the nccusl has drafted and proposed more than 250 uniform acts covering a wide range of legislation impacting everything from law real estate limited liability franchise and business opportunities and unfair trade practices 3there are currently twelve articles in the act act i contains overall provisions and definitions and the scope and function of the partnership agreement article ii focuses on the formation rules and status of the partnership article iii contains the rules of transfer of the partnership s property statements and the liability of the partners in relation to debts liabilities and obligations 1article iv covers the responsibilities of the partners to each other and in the partnership including management and distribution rights as well as highlighting loyalty care and good faith dealing article v implements the pick your partner principle article vi lists the events that cause a partner to dissociate article vii lists the rules on purchasing a dissociated partner s interests article viii deals with dissolving and winding up the partnership 1article ix deals with principal provisions related to llps article x allows for mergers exchanges conversions and domestication transactions article xi deals with foreign llps and article xii includes miscellaneous provisions 1uniform partnership act 1997 revisionin 1996 the limited liability partnership amendments were promulgated and combined into the uniform partnership act in addition to the rule stating that when a partner leaves a partnership the remaining partners have 90 days to determine if the partnership should continue or dissolve the uniform partnership act includes the following features uniform partnership act upa vs revised uniform partnership act rupa the uniform partnership act was established in 1914 it was revised in 1994 which became known as the revised uniform partnership act rupa the act was then revised again in 1996 and 1997 which was the last full revision the 1997 version is the official version and on the website there is no reference to rupa rupa is used unofficially by certain individuals but it only adds confusion 12the uniform partnership act 1997 is the official version and has been amended in 2011 and 2013 1special considerationsthe role of the national conference of commissioners on uniform state laws nccusl also known as the uniform law commission ulc is to promote the uniformity of state laws in the united states the ulc is a nonprofit association of more than 300 uniform law commissioners representing each state the district of columbia the commonwealth of puerto rico and the u s virgin islands the ulc s law commissioners must be members of the bar many of them are practicing lawyers law professors or judges 3while the ulc is responsible for researching proposing and drafting uniform state laws it is up to the individual state governments to decide if they will enact the laws recommended by the ulc the uniform partnership act is just one of many uniform laws drafted by the ulc that has been widely enacted by the states examples of other uniform acts include the uniform trust code uniform anatomical gift act uniform probate code uniform consumer credit code and uniform transfers to minors act | |
what is the difference between upa and rupa | the uniform partnership act was established in 1914 in 1994 it went under certain revisions known as the revised uniform partnership act the act went through further revisions in 1996 and for the last time in 1997 which is known as the uniform partnership act 1997 and is the only version of the act 1 | |
what is a person under the uniform partnership act | a person under the uniform partnership act includes individuals partnerships limited liability companies corporations and other associations 4 | |
are partnerships created with a fixed duration | partnerships can be created with or without a fixed duration the partnership agreement will list the duration of the partnership if there is a dissolution date up until then is how long the partnership will last if there is no fixed duration then the partnership will exist until dissolution is decided between the partners | |
what are uniform policy provisions health insurance | uniform policy provisions refer to a set of clauses some mandatory and some optional that insurance companies include in written insurance policies each state has a uniform individual accident and sickness policy provisions law which dictates precisely the provisions that must appear in an insurance policy in general the state requires 12 mandatory provisions and gives the insurance company discretion to include any of 11 optional provisions when writing a policy understanding uniform policy provisions health insuranceuniform policy provisions provide insurance carriers with a list of required and optional items to include when writing insurance policies the national association of insurance commissioners naic played a leading role in developing the list of provisions each state has implemented its own version of the uniform individual accident and sickness law which lays out specific requirements the states can customize their requirements as long as those adjustments do not infringe on the rights of the insured the provisions appear in an insurance policy as a series of clauses mandatory uniform policy provisionsthe 12 mandatory provisions include the rights and obligations of both the insurer and the insured among the burdens that fall on the insurer are the need to include any relevant information within the original policy or official amendments the requirement of a stated grace period for delinquent premium payments and instructions for reinstatement of a policyholder who misses that grace period the provisions that cover the responsibilities of the policyholder include requirements that they notify the insurer of a claim within 20 days of a loss provide proof of the extent of that loss and update beneficiary information when changes take place optional uniform policy provisionsafter the 12 mandatory provisions insurers may include any of 11 optional clauses in a policy the policyholder and the insurer can negotiate which of these provisions will be part of the policy but generally the insurer will have the final say the 11 optional provisions tend to place more of a burden on the insured to comply with certain requirements than on the insurer these requirements include the obligation to inform the insurer of changes in income especially if due to a disability or changes to a more or less dangerous occupation the optional clauses also state that any misstatements regarding age use of illegal substances or engagement in illegal occupations will have an adverse impact on the insured s ability to collect on claims otherwise covered by a policy | |
what is the uniform premarital and marital agreements act | adopted by 26 states the uniform premarital and marital agreements act drafted by the national conference of commissioners on uniform state laws in 1983 helped bring consistency to contracts signed by two parties entering a marriage the act allows the parties to a prenuptial agreement to choose which state s statutes for marital law will cover the agreement 1 understanding the uniform premarital and marital agreements actthe uniform premarital and marital agreements act states that parties should be free to create financial terms in which they both agree with some limitations it makes a review of minimal standards of fairness by the state mandatory based on circumstances at the time of the agreement after the review a state can refuse to enforce an agreement that puts one party in financial jeopardy the act also addresses burden of proof and establishes when rights at divorce or death might be waived or modified 1 the aim of the act is to provide courts with flexibility in making rulings on family law cases and also give individuals who are considering signing a premarital agreement some confidence that the agreement they enter into will be enforceable and how it will be enforced the act focuses on premarital and marital agreements or postnuptial agreements it treats postnuptial agreements with the same requirements and principles that it treats premarital agreements it s important to know that some states apply different legal standards to each including higher burdens being placed on postnuptial agreements prenups and the uniform premarital and marital agreements actmost commonly prenuptial agreements address division of property spousal support and child custody should divorce occur they may also include provisions for forfeiting assets in the event of adultery prenups are usually requested by the party that stands to lose the most money or property in the case of divorce especially in states that follow the community property law2 each spouse is entitled to half of everything acquired during the marriage a couple can choose any state in which one of the parties lives or plans to live or the state in which the couple will be married to have a prenup enforced because this act has not been passed in all states parties to a prenuptial contract are also limited to choosing only the states that have passed the uniform premarital and marital agreements act the main advantage of choosing to have a prenuptial agreement fall under the jurisdiction of a state that has passed the uniform premarital and marital agreements act is that many of these states have comprehensive provisions and statutes to resolve the issues associated with prenuptial agreements such as estate planning division of property alimony financial assets and custody in other states rulings on various situations may be less stable due to the fact that some states base their rulings on case law | |
what is the uniform prudent investor act upia | the uniform prudent investor act upia is a standard that sets out guidelines for trustees to follow when investing trust assets on behalf of a trustor it also applies to financial professionals who make recommendations or place trades on behalf of clients it is an update to the former prudent man standard intended to reflect the changes that have occurred in investment practice since the late 1960s specifically the uniform prudent investor act adopts a modern portfolio theory mpt and total return approach to the exercise of fiduciary investment and discretion understanding the uniform prudent investor act upia the uniform prudent investor act was adopted in 1992 by the american law institute s third restatement of the law of trusts it was an update to the previously accepted prudent man rule 1by taking the total portfolio approach and eliminating category restrictions on different types of investments the uniform prudent investor act fostered a greater degree of diversification in investment portfolios it also made it possible for trustees to include in their portfolios investments such as derivatives commodities and futures while these investments individually have a relatively higher degree of risk they could theoretically reduce overall portfolio risk and boost returns when considered in a total portfolio context the prudent man rulethe prudent man rule was based on massachusetts common law written in 1830 and revised in 1959 it stated that a trust fiduciary was required to invest trust assets as a prudent man would invest his own assets with the following in mind 2a prudent investment will not always turn out to be a highly profitable investment in addition no one can predict with certainty what will happen with any investment decision more recently the prudent man rule has been renamed the prudent person rule this set of guidelines can also be applied outside of trustee domains where it is referred to as the prudent investor rule the uniform prudent investor act s updates to the rulethe uniform prudent investor act made four main changes to the previous prudent man rule standard 3the uniform prudent investor act s most important change was that the standard of prudence would henceforth be applied to any investment in the context of the total portfolio rather than to individual investments | |
what are the uniform rules for demand guarantees urdg | the uniform rules for demand guarantees urdg refers to a set of international guidelines produced by the international chamber of commerce icc and adopted in 1991 1 these guidelines set forth generally agreed upon rules governing securing payments and meeting performance guarantees in contracts among global trading partners in general the urdg guidelines outline the rights and obligations of parties under demand guarantees a demand guarantee is a type of protection that one party in a transaction can impose on another party in the event that the second party does not perform according to predefined specifications according to the icc many bankers traders and industry associations recognize and accept the urdg because it attempts to balance the interests of all parties involved in various types of international contracts both the world bank and the united nations commission on international trade law uncitral each have adopted the urdg standard understanding the uniform rules for demand guarantees urdg the urdg covers billions of dollars of contract guarantees in a number of industries including banking and construction most commonly the urdg covers so called demand guarantees which are specific rights or countermeasures one party can impose on another party if the second party does not perform according to contract specifications however the udrg also applies to agreements requiring the decision of an arbitrator as well as some contracts that involve slightly more complex agreements such as situations dealing with the default of one of the parties the urdg works in concert with other icc rules such as the so called uniform customs and practice for documentary credits ucp 600 as well as the uniform rules for bank payment obligations according to the icc voluntarily abiding by the urdg and its related rules helps improve the speed and volume of trade and avoid disputes without having to go to court 2 the publication icc uniform rules for demand guarantees including model forms is considered to be the comprehensive guide for understanding the urdg guidelines it includes a series of ready to use templates and forms rules for handling extended payments and various checklists and best practices the most significant urdg update in the past three decades occurred in 2010 with the update referred to as urdg 758 this update to the original urdg rules attempted to clarify several common issues such as those involving payment contingencies it also provided guidance regarding the handling of specific electronic documents and fund transfers and provided additional model forms the icc worked on writing urdg 758 for more than two years prior to its release taking into account feedback from various groups of constituents as well as roughly 600 individual comments 3 the new rules attempt to reduce conflicts and contract rejections according to the icc the rules included in urdg 758 are intended to bring financial stability to international markets adds new definitions and rules interpretations and provides guidance for the treatment of contentious practices 1 | |
what is the uniform securities act | the uniform securities act is a model law created as a starting point for state level securities regulation the purpose of the uniform securities act is to deal with securities fraud at the state level and to assist the securities and exchange commission sec in enforcement and regulation uniform securities act explainedbecause not all investments are covered federally and not all investment dealers are registered at the federal level the sec cannot protect all investors and pursue all security violations this created the need for state level regulations such as the uniform securities act to further protect investors each state has its own security laws colloquially referred to as the blue sky laws | |
how the uniform securities act is applied | the uniform securities act is a framework that guides states in the crafting of their own securities legislation the act evolved through a series of amendments due to earlier regulations not being adopted consistently across the country some jurisdictions did not enact each securities act introduced by the uniform law commissioners through subsequent revisions and replacements of prior regulations the uniform securities act brought more parity to the federal and state implementation of securities protections 1one of the issues with regulating securities from two different levels of government is the potential for duplication the uniform securities act outlines the authority and role of state and federal regulators in dealing with securities fraud 1 for example many fraudulent acts occur at the local level with pyramid schemes and other scams that means enforcement through state law is necessary to address such crimes the act provides more structure and consistency in enforcement authority across states as well as in coordination with federal authority regarding the prosecution of securities fraud the intent of securities regulations whether at the state or federal levels is to prevent the fraudulent sale of securities to investors regulatory efforts stem from three primary elements the protection of the investor regulations to ensure transparent fair and efficient marketplaces and finally regulations to reduce systemic risk to achieve these ends registration is required for initial public offerings those who deal in securities specifically investment advisers broker dealers and their representatives and agents must be registered in order to prohibit and prevent securities fraud regulatory agencies must also have enforcement authority to address such actions that includes being granted the ability to establish regulations and rules on securities transactions and having the capacity to bring the prosecution of criminal and civil violations to court 1the uniform securities act serves as the structure that includes state level authority to take action on these issues | |
what is the uniform simultaneous death act | the term uniform simultaneous death act refers to a law used in some states to determine inheritance in cases where two or more people die around the same time according to the act the assets of two or more people who have no will and die within a 120 hour period can be passed down to their relatives rather than from one estate to another this act is used to avoid double administrative costs 1 | |
how the uniform simultaneous death act works | the uniform simultaneous death act was first enacted in 1940 and has been revised in subsequent years most states adopted the law in the u s while only 21 states and the district of columbia have enacted the revised version which was updated to include certain provisions in 1993 1 one of these amendments allowed the law to be applied to individuals who are missing for at least five years in the event that a body can t be located and the person is presumed dead 2someone who dies without leaving a will is said to be intestate when someone dies in intestacy it s up to a probate court to decide how the estate is administered the uniform simultaneous death act helps heirs avoid this step by clarifying issues surrounding inheritance when two or more people die without leaving wills here s how it works let s say a couple are involved in a plane crash if one is pronounced dead at the scene and the other dies a day later the uniform simultaneous death act goes into effect in this case the assets are combined and distributed to the relatives of both individuals equally rather than transferring all the assets first to the estate of the wife and then to all of her relatives without the law two probates would be necessary to process the transfer of estates before the assets are distributed probate is the general process used to administer the will of a deceased person or the estate of an individual who doesn t leave a will behind probate costs can be rather high deflating the value of an inheritance when the estates of two spouses are involved the uniform simultaneous death act helps cut down the administrative costs related to the probate process special considerationsit is possible that a person s will contains language that alters or eliminates the application of the uniform simultaneous death act as such clauses in the act such as the 120 hour survival period requirement may be waived under a variety of conditions if a will deed trust insurance policy or other governing instruments include language that expressly addresses simultaneous deaths or deaths in a common incident the provisions from that document would go into effect 3 for example an individual s last will and testament may specifically detail how to direct the release of particular assets in the event of a simultaneous death with their spouse or if their deaths occur within a set time frame of each other the 120 hour waiting period may be waived if there are any governing documents discuss simultaneous deaths or if its application has adverse effects 3 the required 120 hour survival period as prescribed by the act may also be ignored if its application has adverse effects this includes instances involving an unintended failure or duplication of a disposition survival however must still be established with convincing and clear evidence 3 uniform simultaneous death act vs uniform probate codewhile 21 states and the district of columbia have adopted the uniform simultaneous death act as law others have enacted all or parts of the uniform probate code as law 1 this code governs inheritance and the estates of deceased parties by providing uniformity to the probate process the upc was first promulgate in 1969 4 the code is made up of several articles that cover issues surrounding the death of individuals without a will the probate of wills how to administer estates nonprobate property transfers and other related topics | |
what is a uniform transfer tax | a uniform transfer tax is the combination of federal estate taxes and federal gift taxes into a single tax | |
what is the uniform transfers to minors act utma | the term uniform transfers to minors act utma refers to a law that allows a minor to receive gifts without the aid of a guardian or trustee gifts can include money patents royalties real estate and fine art a utma account allows the gift giver or an appointed custodian to manage the minor s account until the latter is of age it also shields the minor from tax consequences on the gifts up to a specified value understanding the uniform transfers to minors act utma the utma is similar to the original version of the uniform gift to minors act ugma it allows minors to receive gifts and avoid tax consequences until they become of legal age in the state in which they live typically 18 or 21 years of age the utma incorporates the language of the ugma and extends the original definition of gifts beyond cash and securities to include real estate paintings royalties and patents 1the utma provides a convenient way for children to save and invest without carrying the tax burden the internal revenue service irs allows for an exclusion from the gift tax of up to 18 000 per person for 2024 a 1 000 increase from the previous year for a qualifying gift including gifts to minors 2the minor s social security number ssn is used for tax reporting purposes on utma accounts 3 because assets held in a utma account are owned by the minor this may have a negative impact when the minor applies for financial aid or scholarships 4each state has the option to adopt or amend the utma for its residents 1 for example south carolina has not adopted the utma for its citizens and florida passed a statute in 2015 that allows any property to be held by the utma custodian until the minor is 25 if desired 5any earnings that are generated within a utma are taxed at the kiddie tax rate by the irs up to the allotted threshold of 2 500 6 earnings after that are taxed at the adult donor s marginal tax rate 7special considerationsthe utma allows the donor to name a custodian who has the fiduciary duty to manage and invest the property on behalf of the minor until that minor becomes of legal age 8 the property belongs to the minor from the time the property is gifted 9 if the donor dies while serving as custodian the value of the custodianship property is included in the donor s estate 10the assets in a utma are counted as part of the donor s taxable estate until the minor takes possession 11uniform transfers to minors act utma vs uniform gift to minors act ugma as noted above the utma is similar to an earlier version of the ugma in fact it is an extension of the ugma the ugma was developed in 1956 and revised in 1966 it is limited to the transfer of cash or securities the utma was finalized in 1986 both laws were approved by the national conference of commissioners on uniform state laws and adopted by most of the 50 states but each state can modify its statute 1the ugma and utma provide a way to transfer property to a minor without the need for a formal trust they allows assets to be managed by a custodian who is appointed by the donor the assets are then turned over to the minor when they become of legal age in the state where the gift was made the primary difference between the ugma and the utma is in the assets that are allowed in these accounts ugmas are limited to cash and securities but many types of property can be transferred to minors in the utma including contributions to a ugma or utma are made using after tax dollars which means donors don t receive a tax deduction for making them just like a utma gifts made to a ugma are tax free up to 17 000 per person for 2023 and 18 000 per person for 2024 2can a minor receive gifts or assets without a guardian or trustee yes a minor can receive gifts or assets without a guardian or trustee as it is stipulated in the uniform transfers to minors act the utma is a law that governs the transfer of assets from adults to minors it provides parents and other adults with a tax advantaged way to pass on gifts to minors without needing to create a formal trust in doing so the adult who donates the gift would typically act as the custodian for those assets until the minor reaches legal age alternatively the donor can also appoint a third party to serve as the custodian of those assets 1 | |
what is the difference between the utma and the uniform gift to minors act ugma | the utma and the ugma serve similar purposes but there are important differences between them most notably the utma allows for a broader range of assets to be gifted including patents royalties real estate and art 1the utma also provides additional time for the assets being gifted to reach their maturity dates such as in the case of a bond by contrast the ugma requires the assets to be assumed by the minor once the minor reaches 18 years of age | |
what are the pros and cons of using a utma account | the main advantage of using a utma account is that the money contributed to the account is exempted from paying a gift tax of up to a maximum of 18 000 per year for 2024 2 any income earned on the contributed funds is taxed at the tax rate of the minor who is being gifted the funds since the minor s income is presumably significantly lower than that of the adult donor this can lead to significant tax savings 6one of the drawbacks of using a utma account however is that it can make the recipient less eligible for need based college scholarship programs and other such initiatives 4 | |
when can a child claim ownership of an utma account | depending on the state a utma account is handed over to a child when they reach either age 18 or age 21 in some jurisdictions at age 18 a utma account can only be handed over with the custodian s permission and at 21 is transferred automatically enquire with the bank or brokerage where the utma is housed for clarification the bottom linethe uniform transfers to minors act utma is a law designed to allow a minor to receive gifts including money patents royalties real estate fine art securities and more without the aid of a guardian or trustee it is similar to an earlier law the uniform gifts to minors act ugma which was limited to gifts of cash and securities utma accounts are often set up to help fund a child s education although it s important to keep in mind that having a utma may impact a child s qualification for financial aid or scholarships a 529 plan may be a better choice for a child headed to college 13 | |
what is a unilateral contract | a unilateral contract is a one sided contract agreement in which an offeror promises to pay only after the completion of a task by the offeree in this type of agreement the offeror is the only party with a contractual obligation a unilateral contract differs from a bilateral contract in which both parties are bound by the agreement understanding unilateral contractsunilateral contracts occur when the offeror makes an offer to another party this type of contract requires the offeree to perform an act that the offeror requests the offeree has no obligation to complete the task and the offeror will only pay if the request is completed unilateral contracts are considered enforceable by contract law however legal action is not commonly pursued unless the offeree claims to be eligible for remuneration tied to the request contract breach depends on whether or not the terms of the contract were clear and if it can be proven that the offeree is eligible for payment of specified acts based on the unilateral contract s provisions types of unilateral contractsunilateral contracts are primarily one sided without obligation from the offeree open requests and insurance policies are two of the most common types of unilateral contracts offerors may use unilateral contracts to make a broad or optional request and payment is made only when certain specifications are met if an offeree completes the task the offeror is required to pay rewards are a common type of unilateral contract request where information received may lead to a criminal s conviction that will warrant a payment funds can be paid to a single individual or several individuals offering information that serves this specific purpose a unilateral contract is commonly used with a request for labor an individual may offer to pay someone to clean their house or walk their dog and the offeree is paid only when the task is completed insurance policies have unilateral contract characteristics since the insurer promises to pay if certain acts occur under the terms of a contract s coverage in an insurance contract the offeree pays a premium specified by the insurer to maintain the plan and receive coverage if a specific event occurs the 4 elements of a unilateral contractto make a unilateral contract legally binding four elements must exist one party makes an offer to another party and both must accept the offer without coercion or force from either side consideration is the price paid for the promise or agreement and it does not need to be a monetary payment consideration can be any type of property or holding that both parties agree to warrant acceptable payment both parties must have the full intention to create a binding contract and understand the terms and conditions of the agreement both parties must fully understand what must happen to complete the terms of the contract in a unilateral contract an action or task will need to be completed for the contract to be fulfilled unilateral contracts vs bilateral contractscontracts can be unilateral or bilateral in a unilateral contract only the offeror has an obligation the offeree is not required to complete the task or action in a bilateral contract both parties agree to an obligation and involve equal obligation from the offeror and the offeree in general the primary distinction between unilateral and bilateral contracts is the amount of reciprocal obligation from both parties | |
how do you know if a contract is unilateral | a unilateral contract does not obligate the offeree to accept the offeror s request and there is no requirement to complete the task a bilateral contract however contains firm agreements and promises between two parties can you break a unilateral contract in a unilateral contract the offeror may revoke the offer before the offeree s performance begins and this change should be expressed to the offeree before any task is started | |
are unilateral contract mistakes enforceable | if a mistake occurs during a unilateral contract some remedies for a mistake include contract reform where the contract is changed or a new contract is started or full contract cancellation the bottom linein a unilateral contract the offeror is the only party with a contractual obligation the offeror will pay for a specific task or activity only if it is completed by the offeree a unilateral contract differs from a bilateral contract in which both parties are bound by the agreement | |
what is a unilateral transfer | a unilateral transfer is a one way transfer of money goods or services from one party to another it is often used to describe payments made by a government to their citizens or from one country to another country in the form of foreign aid in these cases the supplier of funds receives nothing in return from the recipient a unilateral transfer differs from a bilateral transfer such as bilateral trade which involves reciprocal economic benefit for both parties to a transaction understanding unilateral transfersunilateral transfers occur frequently as gifts in everyday life this can be contrasted with bilateral transfers a mutual exchange of goods money or services a birthday gift or wedding present are examples where nothing is expected in return donations to charities or other forms of philanthropy can also be construed as a unilateral transfer although some such donations may receive tax benefits 1 governments may hand out unilateral transfers in the form of economic stimulus for instance in the checks sent to american families during the financial crisis in early 2020 2unilateral transfers sent by governments are included in the current account of a nation s balance of payments they are distinct from trade transactions which are bilateral in that both parties receive something unilateral transfers encompass things such as humanitarian aid and payments made by immigrants to their native countries unilateral transfers are thus often involved in instances of direct foreign aid unilateral aid occurs when one government directly transfers money or other assets to a recipient country critics have argued however that direct foreign aid can be problematic and lead to negative unintended consequences for instance direct cash sent to africa has been an unmitigated economic political and humanitarian disaster as written by zambian born economist and world bank consultant dambisa moyo in her book dead aid why aid is not working and how there is a better way to help africa 3 foreign governments are often corrupt and use foreign aid money to bolster their military control or to create propaganda style education programs instead of using it to help their population unilateral transfer examplethe economic stimulus provided to citizens during the covid 19 pandemic in the form of direct payments to households constitutes a unilateral payment in that the government provided funds with no expectations of receiving something in return indirectly the expectation was that the payments would help bolster the economy by sparking more consumer spending however there was no expectation or requirement for any repayment the u s government spent an estimated 817 billion on three rounds of payments between march 2020 and march 2021 4 | |
is foreign aid a unilateral transfer | some foreign aid is considered to be a unilateral transfer such as when the u s or another nation provides humanitarian support to a nation without expectation of anything in return but some forms of foreign aid are bilateral such as when a country provides military aid in exchange for certain agreements of cooperation or allyship | |
what are different types of unilateral transfers | a nation providing humanitarian or military aid can constitute a unilateral transfer on an individual level a gift a donation or any other form of aid without expected reciprocation is also considered to be a unilateral transfer | |
what is a unilateral contract | a unilateral contract is a one sided agreement in which the party making the offer agrees to pay only after the party that accepts the offer has completed a task this differs from a bilateral contract in which both parties must abide by the agreement the bottom linea unilateral transfer is a type of payment or aid from one party to another that doesn t require anything in return a government can make a unilateral transfer to its citizens in the form of economic stimulus or social security or to another country in the form of humanitarian or military aid a person or organization can make a gift donation or other form of support to an individual with no expectation of reciprocation constituting a unilateral transfer | |
what is an uninsurable peril | uninsurable perils are events for which insurance coverage is not available or for which insurers are unlikely to underwrite policies an uninsurable peril is typically an event that has a high risk of occurrence meaning the probability of a payout is high and expected perils that insurers are unwilling to cover are often catastrophic in nature understanding uninsurable perilsuninsurable peril risk is relatively widespread across the human experience an example of an uninsurable peril might be if an individual builds a home in a known flood area because the area has a history of that particular peril it is unlikely an insurance company will want to extend flood coverage because of the difficulty in managing the potential risk that sort of difficulty managing the risk is the primary reason why flood insurance exists as a government program managed by the federal emergency management agency fema instead of as a subset of private insurance 1types of uninsurable perilswhile in no way a complete list the major areas where insurance is unobtainable include reputational risk regulatory risk trade secret risk political risk and pandemic risk reputational risk occurs when a company does something or something happens to a company that damages its public image to the point where its business is imperiled for example a ceo is involved in a sexual harassment scandal or someone is randomly placing poison in bottles of a company s product there may be some coverage for product recall expenses for example but generally these situations cannot be insured because an insurer cannot determine what the risk is and what it s worth regulatory risk is the possibility a government agency will do something or a government will pass a law that severely damages a business for example forcing coal powered electric generators to close thousands of new rules and laws are posted at the state local and federal levels every year it s impossible for an insurer to anticipate these or write a policy to mitigate the damage to a company stemming from them trade secrets are essential to many companies yet if they are exposed or stolen the damage is hard to calculate a hacker can steal key computer code a disgruntled employee can walk off with secret formulas or processes predicting how likely this is to happen or the amount of damage is beyond the ability and scope of most insurers political risks such as government expropriation of an asset war or political violence credit default of trade receivables or when foreign governments block transfer of currency and assets are difficult to insure against because they are so unpredictable extreme levels of unpredictability are also expected with pandemics the effects of mass illnesses can vary widely the pandemic level flu h1n1 disrupted some businesses but the viral infection covid 19 profoundly disrupted the world economy because of the unpredictability scale and cost involved in pandemic situations private insurance can t help most people or businesses | |
what is uninsurable property | uninsurable property is a home that is not eligible for insurance through the federal housing administration fha because it needs extensive repairs an uninsurable property is typically ineligible for a mortgage through the fha however the individual purchasing the home may qualify for alternative fha financing options in some circumstances 1more generally uninsurable property may refer to any real estate or other personal property that an insurer decides not to cover understanding uninsurable propertythe federal housing administration fha is overseen by the u s department of housing and urban development hud the fha insures mortgage loans to protect lenders against default allowing fha approved mortgage lenders to offer more attractive options such as a 3 5 downpayment versus the traditional 20 the insurance and mortgages offered through fha come with certain requirements on the condition of the property in the transaction if the repairs required to meet those requirements exceed the fha s limit the property will not be accepted into the program in general the property must meet the minimum property requirements meaning the home must be safe sound and secure 2typically an appraiser and inspector will come out to verify that the requirements have been met which include some of the issues that could prevent insuring a property might include 2repairs on housing may be necessary because of damage from fires storms or age that has made parts of the property fall below standards 31to qualify for an fha loan borrowers must have a minimum credit score of 580 make a downpayment of at least 3 5 of the home s purchase price and obtain mortgage insurance 4 | |
how uninsurable property is treated by private sector insurers | other insurers besides the fha might not insure a property because of specific items that must be tended to such as dead trees or ones that pose a risk of collapse on the property and need to be removed exposed and outdated wiring and other infrastructure issues could cause an insurer to deny coverage the presence of a swimming pool could pose an issue that insurers may not want to cover unless the property includes certain features such as a fence to enclose and secure the pool from outsiders | |
when a home is inspected in conjunction with a sale an inspector will assess the property however it may still be necessary to ask direct questions about the insurability of the home and any issues that stand out if a homebuyer does not remain attentive to such problematic possibilities they may be caught in a deal for a property they cannot secure insurance for if the property owner plans to make repairs to come into compliance there may be policies available that cover the presence of workers who will be on the property to make those repairs | fha 203k loanas stated earlier the department of housing and urban development hud homes must be appraised and inspected before they can be listed the homes typically fall into one of three categories insurable insurable with repair escrow or uninsurable any hud home that is uninsurable will generally have to secure other than fha financing however in certain instances hud will provide financing for purchasing an uninsurable property through its fha 203k loan financing program these are rehab mortgages where the lender rolls the repair costs into the mortgage these homes usually sell at a large discount and are not offered through conventional financing because of their condition 5some of the repairs covered by the fha 203k loan include there are two 203k loan programs that include the standard 203k loan for major repairs and the limited 203k loan for minor repairs capped at 35 000 5 | |
what is needed for a house to be insurable for an fha loan | for a property to be accepted into the fha program it must meet the fha s minimum property requirements which include the home must be safe sound and secure | |
what would fail an fha loan inspection | an fha appraisal and inspection would likely fail if there were signs of structural damage foundation issues a pest infestation or health and safety issues | |
what improvements can you use a 203k loan for | a 203k loan cannot be used for extravagant items such as a swimming pool however it can be used for major repairs including the electrical plumbing roof landscaping and appliances the bottom linethe federal housing administration fha insures mortgage loans allowing borrowers to benefit from a lower down payment however there are minimum property requirements including the home must be safe sound and secure if serious issues exist with the home or property the fha will consider the home uninsurable borrowers would need to contact private insurers to cover the property or a 203k loan could be used to make the necessary repairs | |
what is uninsurable risk | uninsurable risk is a condition that poses an unknowable or unacceptable risk of loss or a situation in which the insurance would be against the law insurance companies limit their losses by not taking on certain risks that are very likely to result in a loss many states offer insurance for otherwise uninsurable risks through their high risk pools however lifetime benefits may be capped and premiums may be expensive understanding uninsurable riskmany people buy insurance even though there s a low probability that the insured will need the policy young adults for example might buy life insurance or health insurance through their employers despite the unlikelihood of needing the coverage for many years others who are at higher risk also buy the insurance and both groups pay their monthly premiums to the insurance company insurance companies practice a policy called risk pooling which is the collection of the premiums from those who are less likely to need the insurance called low risk and those who are more likely to need the insurance called high risk by grouping a large number of people together in a pool the low risk individuals essentially pay through their premiums for the cost of the high risk individuals if an insurance company covered uninsurable risks there would likely be an increase in payouts for insurance claims reducing the funds in the insurance pool as a result uninsurable risks are not included in standard insurance coverage packages for insurance to work most of the group has to go without a loss otherwise the insurance company runs out of money a risk is insurable when the risk is considered calculable and can be measured and tracked by actuaries who study data and probabilities for insurance companies if a river floods 800 times in a century the flood is an insurable risk however the insurer can t insure against a marriage failing with so many factors there s no way an actuary could reasonably calculate a definitive probability of success or failure that s the essence of uninsurable risk high risk coverage is available from some insurance companies and people with uninsurable risks might be able to get some level of coverage this way but coverage will likely be limited and premiums more expensive some governments offer insurance coverage when regular commercial insurance markets can t accept the risk government flood insurance for instance is available in high risk areas because regular insurance companies won t write the policies special considerationscalling a risk uninsurable is not a simple conclusion to make some risks are clearly uninsurable because of the law such as coverage for criminal fines and penalties since the law forbids such coverage however there isn t really a conclusive comprehensive list of all the uninsurable risks out there part of the job of corporate risk managers is to identify their organizational exposures as best they can and then work to manage or eliminate those risks sometimes commercial insurance can be used to remove the bulk of that risk but it s not always possible examples of uninsurable risksalthough each insurance company may have its own policies regarding what they consider insurable and uninsurable below are examples of risks that might be considered uninsurable by many companies if an insurance company considers an event such as a natural disaster or a catastrophe to be too likely to occur the event will likely be uninsurable if a home for example is situated on the coast where there are frequent hurricanes and damage to properties insurance companies might consider the risk of damage too likely to occur as a result the risk would be uninsurable meaning insurance companies wouldn t provide any coverage caused by that particular uninsurable event homes that are located in flood zones or in areas where there are frequent landslides might also be considered uninsurable risks to insurance companies individuals and homeowners would likely need to seek help from the government or an insurance company that provides high risk coverage a company can experience damage to its reputation for example a recall of a company s products due to safety hazards could damage the company s name and reputation an insurance company would face a difficult challenge in determining a monetary value of a company s reputation in order to insure that amount there are too many factors and variables involved for an insurer to value the reputation of one company versus another and too many things could go wrong regulations are laws issued by government agencies designed to protect its citizens from wrongful actions by corporations or other parties regulations can change frequently and many businesses struggle to keep up with the dynamic regulatory landscape examples of regulations include new laws to protect the environment or changes in food safety laws on how food should be processed insurance companies would have a difficult task in predicting the probability of regulatory changes and assigning a monetary value to the damage caused to a company as a result of that change trade secret risk can involve national security when a government employee takes information from a computer the risk can also occur in companies when an employee might take a client list home and offer it to the competition in exchange for a job companies would have difficulty finding an insurer that would cover the damage if its trade secrets were stolen or given out multinational corporations face challenges when they open up operations overseas companies that are located developing nations may experience political risk such as political upheaval if the government is overthrown or collapses developing nations often do not have the financial stability of developed countries and as a result can default or not pay its financial obligations a nationwide default might include the inability to pay for public services or a country being unable to pay its national debt insurance companies would not be able to forecast the likelihood of a political event occurring and the cost of insuring that event would likely be prohibitive a pandemic is an outbreak of a disease that spreads over an entire country or over the whole world the risk of a pandemic are nearly impossible for insurance companies to predict and estimate the damages that could be caused to individuals and corporations businesses might be able to use other insurance policies to recoup some of the costs of a pandemic for example a company might have insurance that covers stoppages in their supply chain such as being unable to buy raw materials or inventory as with the other uninsurable risks there are some insurance companies willing to cover the risks associated with a pandemic however there could be limits to the coverage within those policies and hefty premiums | |
what is an uninsured certificate of deposit | an uninsured certificate of deposit is a cd that is not insured against losses due to the lack of insurance these cds yield a higher interest rate as the purchaser assumes all of the risks if the financial institution or entity that issued the cd goes bankrupt then the purchaser loses the investment understanding uninsured cdsmost cds are insured by either the federal deposit insurance corp fdic or in the case of credit unions the national credit union administration ncua these institutions would pay cd holders up to a certain limit in the event that the lending financial institution was insolvent however there are uninsured cds such as offshore cds and brokered cds offshore cds put your money in a foreign institution s bank certificate the lure is interest rates that are a multiple of what you can get on a similar investment in the united states however the danger is betting on the safety of a foreign bank and if your money is kept in that country s currency rather than in u s dollars you are exposed to currency risk special considerationsan fdic insured account is a bank or thrift savings and loan association account that meets the requirements to be covered by the fdic the type of accounts that can be fdic insured includes negotiable order of withdrawal now checking savings money market deposit accounts and cds the maximum amount insured in a qualified account is 250 000 per depositor per member institution this means if you have up to that amount in a bank account and the bank fails then the fdic makes you whole from any losses that you suffered other categories of cds are exotics that are put together by investment companies investors in search of yield sometimes buy these without realizing that they are not government guaranteed they may have high teaser rates long lock up periods variable rates rates of return tied to indexes like the stock or bond markets or even variable rates tied to an asset that has no publicly revealed price some brokered cds may be partly uninsured other forms of cds are the bull cd bear cd and yankee cd the bull cd s interest rate correlates directly with the value of its underlying market index when someone invests in a bull cd they are guaranteed a minimum rate of return and an additional specified percentage based on the associated market index the interest rate that a holder of a bull cd receives during the life of the cd increases as the value of the market index increases | |
is it safe to invest in an uninsured certificate of deposit cd | there are risks involved with an uninsured certificate of deposit cd investors put their money at risk all the time in uninsured options like mutual funds annuities life insurance policies stocks and bonds each individual has to decide if the higher interest rates are worth the risk | |
what are the benefits of an uninsured cd | while an uninsured cd carries risk the biggest benefit is that you can earn more money higher interest rates over time will bring in a much higher rate of return if you are confident in the market an uninsured cd could make sense for you | |
are cds insured by the federal deposit insurance corp fdic | the majority of cds are provided through banks or credit unions and these bank options are insured by the federal deposit insurance corp fdic for up to 250 000 the national credit union administration ncua provides similar protection for credit union options there are uninsured options typically offered through a brokerage these options include offshore cds bull cds bear cds and yankee cds | |
what is uninsured motorist coverage um | uninsured motorist um coverage is a component of an auto insurance policy that provides coverage when you re in an accident with another driver who does not have insurance if you have um coverage it pays for injuries to you and your passengers and in some instances for damage to your vehicle some states require that auto insurance policies include uninsured motorist coverage while in other states um is an optional endorsement you can add to your policy 1 | |
how uninsured motorist coverage works | most state laws mandate that motorists carry some level of automobile liability insurance coverage and these requirements vary from state to state new hampshire is the only u s state that does not require a minimum amount of auto insurance coverage and virginia lets drivers opt out for a fee 2despite these laws about one in every seven u s drivers on the road does not have auto insurance according to the insurance research council 3 the organization s most recent report on this subject released in 20213 found that washington d c had the highest proportion of uninsured drivers at 25 2 followed by new mexico and mississippi the state with the lowest percentage of uninsured motorists was wyoming with 5 9 because of the risk posed by a potential collision with an uninsured driver about half of states plus washington d c require that auto insurance policies include uninsured motorist coverage 1 several other states require it in certain situations such as if you choose a liability limit higher than the state minimum 4if you re involved in an accident and the other driver is at fault but doesn t have insurance your uninsured motorist coverage can cover the resulting vehicle repairs or medical bills a hit and run driver would also be considered an uninsured motorist so um coverage can also help pay for repairs after this type of accident however if you don t have uninsured motorist coverage you may not receive any payments even if the other person is at fault or it was a hit and run there are two types of uninsured motorist coverage uninsured motorist bodily injury covers medical bills related to a crash while uninsured motorist property damage pays for damage to your car 5 in some states only um bodily injury coverage is available 6uninsured motorist vs underinsured motorist coveragesome drivers have auto insurance but their policy limits may not be enough to cover the full cost of a claim if there s an accident while most states require drivers to have minimum levels of at least liability coverage a driver hoping to save on their car insurance might opt for the lowest mandatory amounts which could lead to financial consequences for other drivers if they re involved in an accident it s important to be aware of this distinction since uninsured motorist coverage is not the same as underinsured motorist coverage uim which would cover a situation where the at fault driver has some insurance but not enough to fully cover your damages 7 some states that require um coverage also require uim coverage but not all of them check with your state s department of motor vehicles if you re unsure some states and insurers allow you to stack or combine coverage limits for um uim bodily injury coverage when you have multiple vehicles listed on the same policy for example if you have two vehicles on a policy and each has a 30 000 um coverage limit you can stack them to create a limit of 60 000 after an accident 8 | |
what do you need to file a um coverage claim | after an accident first check for injuries and call 911 if necessary then call the police to respond to the accident if they don t come or if it s a hit and run try to gather as much information as possible ask for names addresses and phone numbers of potential witnesses if possible get the license plate number of the other car and take photographs of the accident scene as soon as possible file a claim with your insurance company providing all the information you have gathered some insurance providers limit how long you can wait before filing your uninsured claim you ll typically need to submit bills from all medical care received and any automobile repair that resulted from the accident | |
where is uninsured motorist coverage required | um coverage is required in connecticut illinois kansas maine maryland massachusetts minnesota missouri nebraska new york north carolina north dakota oregon south carolina south dakota vermont west virginia wisconsin and the district of columbia 1 it s also required in new hampshire and virginia if you purchase car insurance 910 you ll need it in rhode island if you choose a liability coverage limit higher than the state minimum 4 new jersey requires um coverage if you choose a standard auto policy but not a basic policy 11 | |
what is covered by uninsured motorist insurance | um coverage has two parts bodily injury and property damage um bodily injury typically pays for medical expenses for you and your passengers and may also pay for lost wages um property damage generally pays to repair or replace your car and other items damaged by the accident the exact coverage terms depend on your state laws and insurance policy so read the fine print 1213the bottom lineuninsured motorist insurance covers medical expenses for you and your passengers and damage to your car after an accident with a driver who doesn t have insurance it s required in some states and available as optional coverage in others uninsured motorist coverage also protects you after hit and run accidents | |
what is unintentional tort | an unintentional tort is a type of unintended accident that leads to injury property damage or financial loss in the event of an unintentional tort the person who caused the accident did so inadvertently and typically because they were not being careful the person who caused the accident is considered negligent because they failed to exercise the same degree of care that a reasonable person would have in the same situation understanding unintentional tortthe most common type of unintentional tort is negligence someone is negligent if they unintentionally cause injury to someone in a situation where a reasonable person would have been aware of their actions enough to not cause harm to prove a defendant was negligent a plaintiff must prove three factors the unintentional negligence tort in courtto prove unintentional negligence in a court of law a plaintiff must first prove that the defendant owed the plaintiff a duty of care or an obligation to avoid careless actions that could cause harm to one or more persons second the plaintiff must prove that the defendant failed to provide the standard of care of a reasonable person standard of care is a gauge of how much care one person owes another and it s higher for some people than others doctors for example owe a higher standard of care toward others than a regular person last the plaintiff must prove that the defendant s actions caused their injuries determining the cause known as cause in fact is often done by applying the but for test as in an injury would not have happened but for the defendant s actions children can be held responsible for the damage they cause but the courts place a different standard of care on a child courts will consider the child s age life experience and what a child of a similar age would have done under similar circumstances children under age 6 are rarely found liable for their actions parents can be held liable if they fail to train their children or properly supervise their activities but they are not automatically held liable for a child s actions however a child can sue a parent if they were injured because of a parent s negligence an example of unintentional tortto illustrate this concept consider a camp counselor that takes a group of campers on a river rafting trip but fails to provide life jackets if a camper falls in and drowns a court might contend that the camper would not have drowned but for the camp counselor s failure to provide a life jacket in this example the camp counselor s negligence was the cause in fact of the injury | |
what is a unique three river | the unique three river is a candlestick chart pattern that predicts a bullish reversal although there is some evidence that it could act as a bearish continuation pattern the unique three river pattern is composed of three price candles if the price moves higher after the pattern then it is considered a bullish reversal if the price moves lower after the pattern then it is a bearish continuation pattern | |
what does the unique three river candlestick pattern tell you | the unique three river is a candlestick chart pattern that meets the following criteria the long real body of the first candle shows that bears control the prevailing trend while the hammer in the second candle suggests that bulls are regaining strength following a protracted decline in the third candle the open comes in higher than the prior period s low and the small white body shows signs of stability and the potential for a move higher these dynamics suggest a potential bullish reversal from the downtrend although there is some evidence that it more often leads to a bearish continuation as a result it is important for traders to consider the candlestick pattern within the context of other forms of analysis such as technical indicators or chart patterns over a longer timeframe unique three river trading psychologythe wide range decline on the first trading day drops the security to a new low illustrating that bears control price action weakened bulls make a stand on the second trading day reversing the security after it hits a new low below the first candle their buying power lifts the security into a close in the upper half of the first candle s range the security opens lower on the third trading day signaling a reduction in bull power however bears fail to capitalize on that weakness generating an indecisive session within the trading range of the second candle this behavior may indicate that bear power is waning setting the stage for a bullish price thrust on the fourth trading day trading the unique three river patterntrading candlestick patterns typically require confirmation confirmation is provided on the fourth candle in this case or the candle after the pattern completes if the price moves higher on the confirmation candle this helps confirm the bullish reversal and a trader could take a long position with a stop loss below the low of the second candle if the price proceeds lower on the fourth candle this would negate the bullish bias and instead indicate the potential for the price to drop a trader could take a short position with a stop loss above the high of the second candle the price may move one direction and then the other stopping the trader out but then triggering a trade in the other direction entering a second time may be worthwhile since a false breakout in the opposite direction could fuel a strong price move in the new direction example of how to use the unique three river candlestick pattern for tradingdue to the specifics of the pattern seeing one is relatively rare compared to more common candlestick patterns like engulfing patterns once the psychology of the pattern is understood some traders will trade variations of the pattern as long as the overall psychology remains intact for example the second candle may not be a hammer but rather a long legged doji the third candle may move slightly lower instead of higher close relative to open even with these differences the overall pattern psychology remains intact especially if there is a strong confirmation candle in either direction following the formation the following variation on the unique three river pattern occurred in the gold market during an uptrend the pattern itself was the downward correction within the uptrend following the pattern the price resumed moving higher the pattern does not provide a profit target the trader must determine how and when they will take profit difference between the unique three river and the three inside up candlestick patternsboth of these candlestick patterns are composed of three candles but there are some differences in how the patterns are formed in the three inside up reversal pattern the first candle is a downward candle with a long real body the second candle is fully within the first candle and it has a small upward real body the third is an up candle that closes above the second candle limitations of the unique three river candlestick patternthe main limitation of the pattern is that sometimes the price moves higher after it and sometimes the price moves lower this means traders should wait for confirmation which comes from the fourth candle to signal which direction the price will go next the pattern also doesn t have a profit target so some other method is required for taking profit the unique three river pattern is also quite rare it doesn t occur very often so many traders opt to trade slight variations of the patterns although trading random variations may not produce good results over many trades since such random variations may not have been properly backtested for profitability investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal | |
what is the unit benefit formula | the unit benefit formula is a method of calculating an employer s contribution to an employee s defined benefit plan or pension plan based on years of service although a retirement plan that uses a unit benefit formula can reward employees for remaining at the company longer it can also be more costly to implement for the employer | |
how the unit benefit formula works | a unit benefit plan is an employer sponsored pension plan that provides retirement benefits based on a dollar amount or more typically a percentage of the employee s earnings for each year of service the unit benefit formula means the company pays a percentage of the employee s salary for each year of service a unit benefit plan is usually based on a percentage ranging from 1 25 to 2 5 when the employee retires their years of service are multiplied by the percentage multiplied by the career average salary to determine the employee s annual retirement benefit an advantage of a retirement plan that uses a unit benefit formula is that employees are compensated for working longer at a company however the unit benefit method requires the services of an actuary and in turn higher associated costs for the employer defined benefit plana defined benefit plan is an employer sponsored retirement plan where employee benefits are computed using a formula that considers several factors such as length of employment and salary history the company administers portfolio management and investment risk for the plan there are also restrictions on when and by what method an employee can withdraw funds without penalties 1defined benefit plans which include pension plans or qualified benefit plans are termed defined because employees and employers know the formula for calculating retirement benefits ahead of time this fund is different from other pension funds where the payout amounts depend on investment returns if poor returns result in a funding shortfall employers must tap into the company s earnings to make up the difference because the employer is responsible for making investment decisions and managing the plan s investments the employer assumes all the investment risk a tax qualified benefit plan has the same characteristics as a pension plan but it also gives the employer and beneficiaries additional tax incentives not available under non qualified plans qualified retirement plana qualified retirement plan meets the requirements of internal revenue code section 401a and so it s eligible to receive certain tax benefits such a retirement plan is established by an employer for the benefit of the company s employees 2qualified retirement plans give employers a tax break for the contributions they make for their employees qualified plans that allow employees to defer a portion of their salaries into the plan also reduce employees present income tax liability by reducing taxable income 2 qualified retirement plans can help employers attract and retain employees the internal revenue service irs has established annual contribution limits for employees enrolled in qualified plans such as 401 k s for 2024 the maximum contribution limit for a 401 k is 23 000 if an employee is aged 50 or older they can make an additional catch up contribution of 7 500 3the irs has also established annual limits for total contributions from both the employee and employer to a defined contribution retirement plan for 2024 the total annual contributions to an employee s account cannot exceed 69 000 or 76 500 including catch up contributions 4 | |
what is unit cost | a unit cost is the total expenditure incurred by a company to produce store and sell one unit of a particular product or service unit costs are synonymous with the cost of goods sold cogs this accounting measure includes all of the fixed and variable costs associated with the production of a good or service unit cost is a crucial cost measure in the operational analysis of a company identifying and analyzing a company s unit costs is a quick way to check if a company is producing a product efficiently companies can chart their earnings or losses for products in relation to the volume of sales using a profit volume chart variable and fixed unit costssuccessful companies seek ways to improve the overall unit cost of their products by managing the fixed and variable costs fixed costs are production expenses that are not dependent on the volume of units produced examples are rent insurance and equipment fixed costs such as warehousing and the use of production equipment may be managed through long term rental agreements variable costs vary depending on the level of output produced these expenses have a further division into specific categories such as direct labor costs and direct material costs direct labor costs are the salaries paid to those who are directly involved in production while direct material costs are the cost of materials purchased and used in production sourcing materials can improve variable costs from the cheapest supplier or by outsourcing the production process to a more efficient manufacturer unit cost on financial statementsa company s financial statements will report the unit cost these reports are vital for internal management analysis the reporting of unit costs can vary by type of business companies that manufacture goods will have a more clearly defined calculation of unit costs while unit costs for service companies can be somewhat vague both internal management and external investors analyze unit costs these individual item expenses include all of the fixed and variable expenses directly associated with a product s production such as workforce wages advertising fees and the cost to run machinery or warehouse products managers closely monitor these costs to mitigate rising expenses and seek out improvements to reduce the unit cost typically the larger a company grows the lower the unit cost of production becomes this reduction is because of economies of scale production at the lowest possible cost will maximize profits accounting for unit costsprivate and public companies account for unit costs on their financial reporting statements all public companies use the generally accepted accounting principles gaap accrual method of reporting 1 these businesses have the responsibility of recording unit costs at the time of production and matching them to revenues through revenue recognition as such goods centric companies will file unit costs as inventory on the balance sheet at product creation when the event of a sale occurs unit costs will then be matched with revenue and reported on the income statement the first section of a company s income statement focuses on direct costs in this section analysts may view revenue unit costs and gross profit gross profit shows the amount of money a company has made after subtracting unit costs from its revenue gross profit and a company s gross profit margin gross profit divided by sales are the leading metrics used in analyzing a company s unit cost efficiency a higher gross profit margin indicates a company is earning more per dollar of revenue on each product sold breakeven analysisthe unit cost also known as the breakeven point is the minimum price at which a company must sell the product to avoid losses as an example a product with a breakeven unit cost of 10 per unit must sell for above that price revenue above this price is company profit the calculation of the unit cost of production is a breakeven point this cost forms the base level price that a company uses when determining its market price value overall a unit must be sold for more than its unit cost to generate a profit for example a company produces 1 000 units that cost 4 per unit and sells the product for 5 per unit the gain is 5 minus 4 or 1 per unit in revenue if a unit were priced at 3 per unit there would be a loss because 3 minus 4 cost is a loss of 1 per unit companies consider a variety of factors when determining the market offering price of a unit some companies may have a high amount of indirect costs which requires higher pricing to more broadly cover all of the company s expenses real world exampleunit cost is determined by combining the variable costs and fixed costs and dividing by the total number of units produced for example assume total fixed costs are 40 000 variable costs are 20 000 and you produced 30 000 units the total production costs are the 40 000 fixed costs added to the 20 000 variable costs for a total of 60 000 divide 60 000 by 30 000 units to get 2 per unit production cost 40 000 20 000 60 000 30 000 2 per unit | |
what is a unit investment trust uit | a unit investment trust uit is an investment company that offers a fixed portfolio generally of stocks and bonds as redeemable units to investors for a specific period of time it is designed to provide capital appreciation and or dividend income unit investment trusts along with mutual funds and closed end funds are defined as investment companies understanding unit investment trusts uits investment companies offer individuals the opportunity to invest in a diversified portfolio of securities with a low initial investment requirement uits are sold by investment advisors and an owner can redeem the units to the fund or trust rather than placing a trade in the secondary market a uit is either a regulated investment corporation ric or a grantor trust a ric is a corporation in which the investors are joint owners and a grantor trust grants investors proportional ownership in the uit s underlying securities | |
how investments are sold | investors can redeem mutual fund shares or uit units at net asset value nav to the fund or trust either directly or with the help of an investment advisor nav is defined as the total value of the portfolio divided by the number of shares or units outstanding and the nav is calculated each business day on the other hand closed end funds are not redeemable and are sold in the secondary market at the current market price the market price of a closed end fund is based on investor demand and not as a calculation of net asset value uits often have a set maturity date between 12 to 24 months during this time period securities usually can not be sold types of unit investment truststhough the underlying characteristics of a uit are often the same across different types of trusts there are different strategies for uits these different types will vary in the underlying assets that are purchased and held as each of the following uits will have a different investment strategy unit invest trusts vs mutual fundsmutual funds are open ended funds meaning that the portfolio manager can buy and sell securities in the portfolio meanwhile a uit pays interest income on the bonds and holds the portfolio until a specific end date when the bonds are sold and the principal amount is returned to the owners investors may prefer uits if they re looking for investments with clearly defined start and stop schedules a uit may also be rolled into other another uit if it is part of a series many investors prefer to use mutual funds for stock investing so that the portfolio can be traded if an investor is interested in buying and holding a portfolio of bonds and earning interest that individual may purchase a uit or closed end fund with a fixed portfolio the uit will have a specified limit on the number of available shares that cannot be merged or split the investment objective of each mutual fund is to outperform a particular benchmark and the portfolio manager trades securities to meet that objective a stock mutual fund for example may have an objective to outperform the standard poor s 500 index of large cap stocks meanwhile uits are not actively managed assets are purchased upfront then those assets are held for the duration of the uit in rare cases trust sponsors may be allowed to exchange the trust assets there are stock and bond uits but bond uits are typically more popular than their stock counterparts as they offer predictable income and are less likely to suffer losses advantages and disadvantages of uitsunit investment trusts uits have several specific investment advantages uits provide investors with access to a diversified portfolio of securities this can help to reduce the risk of losses due to any single security s underperformance be mindful that some uits are industry specific i e 100 invested in healthcare and these uits do hold greater risk uits are required to disclose their portfolios regularly providing investors with greater transparency into their holdings and investment strategy in addition uits are generally passive investments this means they do not involve active management or frequent trading this can result in lower fees and expenses compared to actively managed funds uits are also typically structured as pass through entities which means they do not pay taxes at the trust level this can result in greater tax efficiency uits often have low minimum investment requirements making them accessible to a wider range of investors in addition more investors may appreciate the simplicity of a uit uits have a fixed portfolio of securities and a set investment strategy this means their performance is usually more predictable than actively managed funds that may change their holdings and investment strategy over time uits unfortunately have a number of downsides as well because uits have a fixed portfolio of securities and a set investment strategy investors have little control over the investments made by the trust in some cases poor performers are also retained and sponsors usually maintain uit assets without trading away or changing strategy as mentioned before while uits do provide some diversification they typically invest in a specific market sector or asset class this means they may not provide the same level of diversification as more broadly diversified investments uits are designed to be long term investments so they may not be appropriate for investors who need access to their funds on short notice uits are also not traded on exchanges like mutual funds and may incur fees upfront so investors may have difficulty buying or selling units or must be prepared to incur higher costs when purchasing the investment in some cases uits may not provide as much information about their investment strategy or performance as other types of investments this includes not having as much transparency around fees expenses or future plans for changes in assets may promote diversification depending on assets selectedmay be transparent as there are specific reporting requirementsmay incur less fees due to passive managementmay be more predictable as there is often a set investment strategymay be tax efficient depending on the uit strategymay be less flexible as the uit strategy is usually not changedmay be less diversified if invested in a single industry or asset classmay front loan feesmay be intended for long term holding periods with limited liquiditymay have limited information about fees expenses or future strategyuits and taxationuits are generally structured as pass through entities for tax purposes this means uits often don t pay taxes at the trust level instead income gains and losses are passed through to the investors in the trust as a result investors are responsible for paying taxes on their share of the trust s income gains and losses and the trust is tax exempt the tax treatment of a uit can vary depending on the types of securities held by the trust and the investor s individual tax situation for example if the trust holds stocks or other securities that pay dividends the dividends will be passed through to the investor and taxed as ordinary income similarly if the trust sells securities for a profit all capital gains are passed through to the investor one potential tax advantage of uits is that they are generally structured as a passive investment this means that because investments are bought and sold less frequently they may have lower turnover and generate fewer capital gains than actively managed funds this can result in greater tax efficiency for investors looking to minimize their capital gains taxes uit costslike other forms of investing uits carry with them a variety of costs some uits charge a sales charge called a load this sales charge is typically a percentage of the investment amount and can range from 1 to 5 or more uits typically charge a management fee which is a percentage of the assets held in the trust the management fee covers the costs of managing the portfolio and other administrative expenses though these fees may be less than actively managed investments uits also charge trustee fees these trustee fees cover the costs of the trustee responsible for overseeing the trust trustee fees are typically a fixed amount or a percentage of the assets held in the trust though there may be other expenses included specific for legal accounting custody or administration fees real world exampleguggenheim s global 100 dividend strategy portfolio series 14 cgonnx was founded on march 15 2018 with the intent to provide dividend income it contained 100 diversified positions 45 16 invested in large cap stocks 26 94 in mid caps and 27 90 in small caps 1 roughly half of the securities are invested in u s stocks with the balance invested in many other countries allocation reflects many sectors as well each company it holds represents roughly 1 of the portfolio this uit was created with a mandatory maturity date of june 17 2019 since the maturity date of this uit guggenheim has continually offered new uit offerings for example the global 100 dividend strategy portfolio series 24 was created on sept 9 2020 with a mandatory maturity date of dec 17 2021 2 | |
how does a unit investment trust work | a uit is a type of investment vehicle that pools money from multiple investors to purchase a fixed portfolio of securities such as stocks or bonds once the trust is created investors purchase units that represent a proportional ownership interest in the underlying assets the trust is then managed and income is distributed over the life of the assets undistributed long term capital gains are reported to shareholders on irs form 2439 | |
what is the primary benefit of a unit investment trust | many may argue that the main benefit of a uit is the simplicity because it is a passive investment with a defined strategy the assets of a uit are usually not sold prior to maturity once they are purchased therefore investors usually like the straight forward nature of knowing exactly what securities will be held what timeline is being managed and what risks are being recognized | |
what is the main risk of a unit investment trust | the benefit above may also translate to one of the greatest downsides of a uit because the assets are not frequently bought or sold investments often lock into an investment plan that is not changed the assets may not be re evaluated as they are being held and investors may lose money the bottom linea uit is very similar to a mutual fund however this investment vehicle often employs a passive investment strategy once securities are purchased a uit holds the assets for a predetermined amount of time this gives investors peace of mind knowing the risk and diversification of the portfolio in addition to knowing the tax strategy of the underlying assets | |
what is a unit linked insurance plan ulip | a unit linked insurance plan ulip is a multi faceted product that offers both insurance coverage and investment exposure in equities or bonds this product requires policyholders to make regular premium payments part of the premiums goes toward insurance coverage while the remaining portion is pooled with assets from other policyholders and invested in either equities bonds or a combination of both understanding unit linked insurance plans ulips a unit linked insurance plan can be used for various purposes including providing life insurance building wealth generating retirement income and paying for the educations of children and grandchildren in many cases an investor opens a ulip to provide benefits to their descendants with a life insurance ulip the beneficiaries would receive payments following the owner s death a unit linked insurance plan s investment options are structured much like mutual funds in that they pool investments with those from other investors as such a ulip s assets are managed with an eye toward accomplishing a specified investment objective investors can buy shares in a single strategy or diversify their investments across multiple market linked ulip funds investing in a unit linked insurance planpolicyholders must commit an initial lump sum payment when they first buy into a ulip followed by annual semi annual or monthly premium payments although the premium payment obligations vary from product to product in all cases they are proportionally directed towards a designated investment mandate the regular premium payments enable policyholders to systematically build up principal more quickly than could be accomplished by waiting for returns to accumulate in addition many ulips offer the option of topping up or adding significant lump sums to the balance even though ulips are partly an insurance product a focus on exposure to equities in the investment side of the product can raise investor risk ulips are unique in that they offer flexibility to investors who may adjust their fund preferences throughout the duration of their investment for example they can shuttle between stock funds bond funds and diversified funds depending on their investment needs advantages and disadvantages of ulipsthe obvious benefit of ulips is the dual coverage ulips provide both investment and insurance benefits the life insurance portion of the premium is paid in part and the remaining amount is invested in equity debt or a combination of the two ulips provide flexibility in the form of premium payment alternatives investment possibilities and fund switching as investors can select the investment option that best fits their investing objectives and risk tolerance because ulips are created with long term investment objectives in mind they aid in building wealth over the long term ulips have the potential to provide larger returns than conventional insurance plans because they invest in equities and debt securities in addition investors can set a policy and have auto withdrawals automatically deposited into the plan to ensure long term contributions following a predetermined lock in period ulips offer the option of partial withdrawal this enables investors to take care of their urgent demands without giving up their policy entirely in addition depending on the state of the market and your investing objectives ulips give you the choice of moving between funds as a result investors can transfer funds without terminating their insurance policies despite its flexibility there are some downsides to ulips charges for premium allocation policy administration and fund management are among the high fees associated with ulips the returns on the investment may be greatly impacted by these ongoing recurring charges ulips make investments in debt and equity securities both of which are exposed to market risks there is no assurance of returns and the investment s value may change based on market conditions like any other investment there is the potential to lose capital contributed to the plan sometimes you can t touch the ulip balance for a period of time for instance a 5 year lock in term for ulips prohibits investors from taking their money out before the period has ended if investors require the money before the lock in period is through they may not have the flexibility they need alternatively investors who choose to terminate their ulip before the lock in period is up can be required to pay exit fees last for investors who demand a higher degree of insurance coverage the insurance component of ulips might not be adequate investors might need to get more insurance coverage in such circumstances thereby not having their entire need by a single ulip alone offers the benefit of both insurance and investmentsmay offer flexibility in the investments that can be chosen | |
are intended for long term wealth creation | may allow for partial withdrawalsoften come with higher fees and administration chargesexperience the same market exposure as any other investmentmay face a lock in period where funds can t be touchedmay not meet all insurance needsulips vs fixed depositsinvestors often must choose between contributing capital between a ulip or a fixed deposit fd plan while ulips are a type of investment option that combines insurance with investing fds are only investment vehicles the main difference between the two relate to the wealth creation the returns on ulip investments in stock and debt instruments are not fixed and are subject to fluctuations market circumstances and fund performance both affect returns fds in contrast provide fixed returns that are independent of the state of the market because ulips invest in stock and debt instruments which are prone to market fluctuations they entail a certain amount of risk you can lose deposited capital with a ulip fds on the other hand offer fixed returns making them lower risk investments at the sacrifice of higher returns after the lock in period partial withdrawals are possible with ulips though there may be fees associated with the withdrawal amount on the other hand fds more often not permit partial withdrawals and an early withdrawal may incur penalties | |
is a ulip better than a mutual fund | for individuals looking for higher liquidity and potentially higher returns a mutual fund may be a better choice on the other hand those looking for better security with a set long term goal may receive the dual benefit of insurance and an investment should they fit with their portfolio profile | |
are ulips high risk | broadly speaking ulips do have an investment component that subjects them to the risk of loss of investment capital ulips often allow an investor to select from a variety of equity and debt instruments so the underlying risk of the plan does hinge on the investments selected and subsequent market performance can i break a ulip before maturity you may be able to break a ulip before it matures often before the designated 5 year lock in period be mindful that they may and likely will be penalty charges and tax implications on the surrender value received when the ulip is broken | |
what happens to a ulip after maturity | once a ulip has matured the policy is paid out to the policyholder the total amount paid out is the sum of the amount insured plus the amount invested note that should the policyholder have passed away a nominee may be elected to receive the distribution the bottom linea ulip combines investing options with life insurance coverage premiums are paid by policyholders with a portion going toward life insurance coverage and the remainder being placed in other investment funds like stocks bonds or mutual funds ulips allow people to participate in the financial markets and have the potential for investment growth while also providing life insurance cover | |
what is the unit of production method | the unit of production method is a method of calculating the depreciation of the value of an asset over time the method becomes useful when an asset s value is more closely related to the number of units it produces than to the number of years it is in use this method often results in greater deductions being taken for depreciation in years when the asset is heavily used which can then offset periods when the equipment experiences less use this method can be contrasted with time based measures of depreciation such as straight line or accelerated methods formula for the unit of production methoddepreciation expense for a given year is calculated by dividing the original cost of the equipment less its salvage value by the expected number of units the asset should produce given its useful life then multiply that quotient by the number of units u used during the current year de original value salvage value estimated production capability u where de depreciation expense begin aligned text de left frac text original value text salvage value text estimated production capability right times text u textbf where text de text depreciation expense text u text units per year end aligned de estimated production capability original value salvage value uwhere de depreciation expense | |
what does the unit of production method tell you | essentially the units of production depreciation expense claimed in a year is based upon what percentage of an asset s production capacity was used up during that year this depreciation method can help companies take larger depreciation deductions in years when a given piece of equipment is more productive companies claim depreciation on a piece of equipment or property for bookkeeping purposes but also for tax deductions larger deductions in more productive years can help offset other higher costs associated with higher production levels the unit of production method most accurately measures depreciation for assets where the wear and tear are based on how much they have produced such as manufacturing or processing equipment using the unit of production method for this type of equipment can help a business keep track of its profits and losses more accurately than a chronology based method such as straight line depreciation or macrs methods the unit of production method depreciation begins when an asset begins to produce units it ends when the cost of the unit is fully recovered or the unit has produced all units within its estimated production capacity whichever comes first unit of production vs macrs methodsthe modified accelerated cost recovery system macrs is a standard way to depreciate assets for tax purposes instead of being dependent on the number of units that an asset might produce this depreciation method involves calculations that result in the asset s value being depreciated with a declining balance for a set period of time then switching to a straight line depreciation method to finish the depreciation schedule for tax purposes the internal revenue service irs requires businesses to depreciate property using the macrs but it allows businesses to exclude property from this method if it can be accurately depreciated by another method such as the unit of production method to use this method the owner must elect exclusion from the macrs by the return due date for the tax year when the property is initially placed into service for more information regarding this election and the specifics of how to make the election see irs publication 946 how to depreciate property | |
how is the unit of production method useful | the unit of production method becomes useful when an asset s value is more closely related to the number of units it produces than to the number of years it is in use | |
how do i calculate units of production | divide the original cost of the equipment minus its salvage value by the expected number of units the asset should produce given its useful life then multiply that quotient by the number of units used during the current year this calculates depreciation expense for a given year | |
how does the unit of production method help businesses | the unit of production method can help companies take larger depreciation deductions in years when a given piece of equipment is more productive the units of production depreciation expense claimed in a year is based upon what percentage of an asset s production capacity was used up during that year the bottom linethe unit of production method calculates the depreciation of an asset s value over time the method is useful when an asset s value is more closely related to the number of units it produces than to the number of years it is in use greater deductions are often taken for depreciation in years when the asset is heavily used which offsets periods when the equipment experiences less use | |
what are unit sales | on a balance sheet unit sales represent the total sales of a product in a given period this sales information is used to determine the price point to achieve profit per unit given the actual cost of production | |
what is a unit trust ut | a unit trust is an unincorporated mutual fund structure that holds assets and provides profits to individual unit owners instead of reinvesting into the fund a unit trust is established under a trust deed and the investor is the beneficiary monty rakusen getty imagesunderstanding unit trusts uts a unit trust is a collective investment packaged under a trust deed the fund manager may invest in bonds or shares on the stock market and the fund is split into units which investors purchase unit trusts provide access to securities mortgages and cash equivalents unit trust structures vary by region but are offered in guernsey jersey fiji ireland new zealand australia canada namibia kenya singapore south africa the u k the isle of man and malaysia in asia a unit trust is the same as a mutual fund in canada these investments are called income trusts managing a unit trustfund managers direct the portfolio of unit trusts trustees are assigned to ensure that the fund manager runs the trust following the fund s investment goals and objectives and are often fiduciaries protecting the best interest of the beneficiaries owners of unit trusts are called unit holders and they hold the rights to the trust s assets registrars act as middlemen or liaisons for both parties | |
how unit trusts make money | the underlying value of the assets in a unit trust portfolio is directly stated by the number of units issued multiplied by the price per unit minus transaction fees management fees and associated costs in a unit trust the price of each unit is based on the fund s net asset value nav divided by the number of units outstanding unit trusts allow for new contributions and withdrawals to and from the pool when money is added to the trust more units are made to match the current unit buying price when units are withdrawn assets are sold to match the current unit selling price fund managers make money through the difference between buying price or offer price and the selling price or bid price the difference between the offer price and the bid price is called the bid offer spread and depends on the assets managed advantages and disadvantages of a unit trustas in all investments there are risks and benefits associated with a unit trust 1managed by a financial professionalone unit includes investments in a diversified portfoliono obligation or fixed investment term requiredperformance of the trust depends on the fund managermanagement feesprincipal investment is not guaranteed | |
how do unit trusts differ from mutual funds | mutual funds are investments made from pooled money from investors and can include bonds and equities however a unit trust differs from a mutual fund in that a unit trust is established under a trust deed and the investor is effectively the beneficiary | |
what is the risk of investing in a unit trust | a unit trust carries risk just like other investments the unit value or income may decrease and an investor s principal is not guaranteed | |
how do investors withdraw money from a unit trust | investors can exit the fund by selling units at the bid price to earn a profit the bid price must be higher than the offer price initially paid for the unit 1 | |
what is a unitary thrift | a unitary thrift is a chartered holding company that controls a single thrift entity historically unitary thrifts could engage in a broader range of activities than bank holding companies however they have come under increasing restrictions since the 2008 financial crisis understanding a unitary thriftunitary thrifts also known as savings and loan holding companies or slhcs are a type of holding company that mainly holds assets in thrift investments thrift institutions also known as savings and loan associations offer a narrower range of products than other financial institutions unitary thrifts focus on customer and community service which typically means they deal with traditional basic banking products such as savings and checking accounts home loans personal loans automobile loans and credit cards these thrifts are more limited in these areas such as providing loans for single family homes as opposed to larger real estate ventures similarly they focus on individuals and have only limited dealings with businesses thrifts are required by law to maintain 65 of their portfolio in assets related to housing or other qualified assets while they are only allowed to have 10 of assets in commercial loans 12thrifts have traditionally catered towards the middle and working class and offer higher interest rates on savings than larger national banks the reason they can offer better rates is because that they can borrow at lower rates from the federal home loan banking system savings and loan ownership structuresunitary thrifts represent one of the two ownership models for savings and loan companies unitary thrifts offer a small group of investors a way of controlling a savings and loan through the purchase of stock in the holding company that owns the thrift due to the liberalization of lender tests a variety of financial institutions are able to own depository institutions these include insurance companies and commercial companies these entities can buy thrifts becoming a holding company and the owners of these companies gain exposure to the thrift the other ownership model is a mutual ownership structure where depositors and borrowers receive part ownership of the savings and loans when they engage in business with the company regulatory history of unitary thriftsbecause thrifts tended to serve customer needs rather than investor desires they initially operated under less regulatory oversight and prior regulatory regimes allowed unitary thrifts to open branches anywhere in the united states in the 1980s the savings and loan industry underwent a crisis after thrifts engaged in risky financial activities in an attempt to cover losses caused by depositors who moved their cash from thrifts to money market funds as interest rates boomed in the late 1970s 3by 1989 much of the industry had collapsed after failed thrifts caused the insolvency of the federal savings and loan insurance corporation fslic which insured deposits 3due to regulatory changes and mergers thrift banks are not as prominent as they once were the financial services modernization act of 1999 also known as the gramm leach bliley act forbade the office of thrift supervision ots from accepting any new applications for unitary thrifts since that time the federal government has increased restrictions on the remaining unitary thrifts 4after the 2008 financial crisis sweeping regulation was made across the financial industry the passage of the landmark dodd frank wall street reform and consumer protection act in 2010 eliminated the ots in 2011 which suffered from implications of wrongdoing in the collapse of indymac and the failure of aig during the 2008 financial crisis 5dodd frank passed supervision of legacy unitary thrifts to other federal agencies and the goal was that savings and loan holding companies slhcs would be treated almost like bank holding companies bhcs with only a few distinctions this would allow for more oversight over thrifts much of the legislation impacted controlling and non controlling ownership of thrift holding companies the composition of capital an introduction of new capital ratios as well as new liquidity ratios there are also other criteria such as being well managed and well capitalized | |
what is a unit bank | a unit bank is a small local bank that provides banking services to a small community in the region it is located unit banks stand in contrast to large national banks that provide a vast array of services to millions of customers through different branches a unit bank does not have any other locations or branches and is a standalone entity | |
what is the difference between a unit bank and a branch bank | a unit bank is one single bank that provides simple banking services to its clients such as checking and savings accounts and small loans a branch bank on the other hand is part of a larger bank that operates in multiple locations across the country or specific region through its many bank branches unit banks are not connected to any other financial entity in the way bank branches are connected to one another | |
what services do thrift banks provide | thrift banks provide simple banking services such as checking and savings accounts mortgage loans personal loans and credit cards | |
what is the united nations un | the united nations un is an international nonprofit organization formed in 1945 to increase political and economic cooperation among its member countries there are more than 190 member states in the un all of which are part of the un s general assembly headquartered in new york the organization is guided by a charter and headed by its secretary general it focuses on peace security human rights and other issues the un is part of the larger united nations system understanding the united nations un the united nations was formed in 1945 in the wake of world war ii to reduce international tension promote human rights and lower the chance of other large scale conflicts it came out of the league of nations which was established after wwi in 1920 to promote international relations and cooperation the league could not prevent the war in europe and asia in the 1930s the u s wasn t part of the league of nations 12headquartered in new york and led by the secretary general the un has 193 member states representing almost every country in the world there are five permanent u n members the u s russia france the u k and china when a new state applies to join the un it only takes one permanent member to veto the application 3a few states lack un membership though countries exercise de facto sovereignty in some cases the international community doesn t recognize non members as independent such as tibet somaliland and abkhazia 4 some countries were blocked from being admitted taiwan and kosovo among others by more powerful member states 56the un coordinates its work with the funds programmes specialized agencies and other organizations of the un system 7 some of the key focus areas include the united nations charter which is the founding document of the organization was signed on june 26 1945 and went into effect on oct 24 1945 it was amended three times between 1963 1965 and 1973 8 you can read the full text here structure of the united nations un the un is made up of five principal bodies the un general assembly the un secretariat the international court of justice the un security council and the un economic and social council a sixth the un trusteeship council has been inactive since 1994 9this is the un s main deliberative body in which all members have equal representation it is headquartered in new york city and its responsibilities include setting the un s budget appointing rotating members to the security council and passing non binding resolutions that express the opinions of the international community 10the un secretariat is the executive wing of the un charged with implementing policies set by its deliberative bodies its head the secretary general is the un s top official the secretariat which is based in new york city includes the department of peacekeeping operations which dispatches un soldiers known as blue helmets on missions authorized by the security council 11the international court of justice is based in the hague and has two main functions to settle disputes submitted by member states according to international law and to issue advisory opinions on legal questions submitted by un agencies there are 15 judges and the court s official languages are french and english appeals are not allowed making the judgments final 12the un s secretary general is ant nio guterres the secretary general acts as a diplomat advocate civil servant and chief executive officer ceo guterres assumed the role in 2017 and was sworn in for a second term in 2022 1314the un security council is charged with maintaining international security it authorizes peacekeeping missions accepts new u n members and approves changes to the un charter 15 the security council s structure allows a few powerful member states to dominate the un russia the u k france china and the u s hold permanent seats on the council and enjoy veto power the security council s other 10 seats rotate on a staggered two year schedule these seats are occupied by algeria 2025 ecuador 2024 guyana 2025 japan 2024 malta 2024 mozambique 2024 south korea 2025 sierra leone 2025 slovenia 2025 and switzerland 2024 the years in parentheses indicate the end of their terms on the council 16the un economic and social council coordinates the activities of the un s 15 specialized agencies these include the | |
which countries are not members of the united nations | there are 193 members of the un all of them sovereign nations a special category allows so called observer states to participate in general assembly meetings but they cannot vote the two observer states are the holy see and palestine the holy see with the pope at its head was granted the status of a permanent observer in 1964 palestine officially applied to join the u n in 2011 but the un security council has not voted on the application in 2012 the state of palestine was officially recognized as a non member state certain other states including kosovo and the republic of china or taiwan are not members because they re not recognized by all members of the un 18who founded the united nations in april 1945 as world war ii was coming to a close representatives of 50 war weary countries gathered in san francisco for the un conference on international organization for two months the group worked on drafting and then signing the un charter creating the united nations an international organization that all hoped would help prevent another world war the charter was ratified by china france the soviet union the united kingdom the u s and other nations and the un got off the ground officially on oct 24 1945 2who is the secretary general of the un the ninth secretary general of the u n ant nio guterres took office on jan 1 2017 the portugal native took the oath for his second five year term which began in january 2022 14 | |
what are the agencies inside the united nations | the u n has specialized agencies that are autonomous organizations working inside the united nations some pre date world war i while others were associated with the league of nations or arose when the u n was created or even later some of the best known of these agencies which are headquartered all over the world include the food and agriculture organization the world health organization the international monetary fund the international labor organization the world bank and the united nations educational scientific and cultural organization 19the bottom linethe united nations is one of the most recognized nonprofit organizations in the world established in 1945 the un has almost 200 member states its focus is to promote peace and security human rights and humanitarian aid operating under the un system the un has five principal bodies the organization is led by the secretary general who acts as a diplomat and an advocate for member states | |
what is the united nations commission on international trade law uncitral | the term united nations commission on international trade law uncitral refers to a subsidiary body of the united nations general assembly established in 1966 uncitral is the core legal body of the u n s system in the field of international trade law 1 the official function of uncitral is to modernize and harmonize the rules of international business the organization is responsible for helping to facilitate international trade and investment it is headquartered in new york with annual sessions held alternatively in vienna understanding the united nations commission on international trade law uncitral the united nations established the united nations commission on international trade law uncitral in 1966 the move was in response to the rapid rise of global trade that took place in the 1960s at the time national governments recognized the need for harmonized global standards to replace the various national and regional regulations which until then largely governed international trade uncitral is headquartered in new york which is the same location as the u n s headquarters annual sessions take place once each year usually in the summer and are held alternatively in new york and at the vienna international centre in vienna 1the organization operates on the premise that international trade has global benefits for its participants with increasing economic interdependence globally uncitral seeks to help expand and facilitate global trade through the progressive harmonization and modernization of the law of international trade through the salient areas of commercial law its mandate covers 2the organization is also responsible for coordinating the work of other bodies active in international trade both within and outside of the un to enhance cooperation consistency and efficiency while avoiding duplication uncitral aims to formulate modern fair and harmonized rules for such commercial transactions its work includes conventions model laws and rules which are acceptable worldwide legal and legislative guides and practical recommendations updated information on case law and enactments of uniform commercial law technical assistance in law reform projects and regional and national seminars on uniform commercial law 3according to uncitral much of the complex network of international legal rules and agreements that affect today s commercial arrangements were reached through long and detailed consultations and negotiations organized by the organization special considerationsthe un general assembly elects members for terms of six years these aren t unison though as the terms of half of the members expire every three years in this way no country or bloc should be able to dominate the organization 4membership of uncitral is determined by the u n general assembly the original membership comprised 29 member states of the u n but this number was expanded to 36 in 1973 its membership grew again in 2004 to 60 states and again in 2022 with a total of 70 member states 35 states represent a variety of legal traditions and levels of economic development member states are deliberately chosen to be globally representative the organization aims to include 14 african states 14 asian states eight eastern european states 10 latin american and caribbean states 14 western european states and others as of june 2022 though there were a total of 65 member states 6 the table below highlights each member state along with their respective three year expiry dates the commission allows states to attend annual sessions even if they re non members the organization refers to them as observer states under the guidelines observer states are authorized to take part in the efforts to achieve a generally acceptable text but cannot vote or object to any recorded decisions 7 | |
what is the united nations commission on international trade law uncitral | the term united nations commission on international trade law uncitral refers to a subsidiary body of the united nations general assembly established in 1966 uncitral is the core legal body of the u n s system in the field of international trade law 1 the official function of uncitral is to modernize and harmonize the rules of international business the organization is responsible for helping to facilitate international trade and investment it is headquartered in new york with annual sessions held alternatively in vienna understanding the united nations commission on international trade law uncitral the united nations established the united nations commission on international trade law uncitral in 1966 the move was in response to the rapid rise of global trade that took place in the 1960s at the time national governments recognized the need for harmonized global standards to replace the various national and regional regulations which until then largely governed international trade uncitral is headquartered in new york which is the same location as the u n s headquarters annual sessions take place once each year usually in the summer and are held alternatively in new york and at the vienna international centre in vienna 1the organization operates on the premise that international trade has global benefits for its participants with increasing economic interdependence globally uncitral seeks to help expand and facilitate global trade through the progressive harmonization and modernization of the law of international trade through the salient areas of commercial law its mandate covers 2the organization is also responsible for coordinating the work of other bodies active in international trade both within and outside of the un to enhance cooperation consistency and efficiency while avoiding duplication uncitral aims to formulate modern fair and harmonized rules for such commercial transactions its work includes conventions model laws and rules which are acceptable worldwide legal and legislative guides and practical recommendations updated information on case law and enactments of uniform commercial law technical assistance in law reform projects and regional and national seminars on uniform commercial law 3according to uncitral much of the complex network of international legal rules and agreements that affect today s commercial arrangements were reached through long and detailed consultations and negotiations organized by the organization special considerationsthe un general assembly elects members for terms of six years these aren t unison though as the terms of half of the members expire every three years in this way no country or bloc should be able to dominate the organization 4membership of uncitral is determined by the u n general assembly the original membership comprised 29 member states of the u n but this number was expanded to 36 in 1973 its membership grew again in 2004 to 60 states and again in 2022 with a total of 70 member states 35 states represent a variety of legal traditions and levels of economic development member states are deliberately chosen to be globally representative the organization aims to include 14 african states 14 asian states eight eastern european states 10 latin american and caribbean states 14 western european states and others as of june 2022 though there were a total of 65 member states 6 the table below highlights each member state along with their respective three year expiry dates the commission allows states to attend annual sessions even if they re non members the organization refers to them as observer states under the guidelines observer states are authorized to take part in the efforts to achieve a generally acceptable text but cannot vote or object to any recorded decisions 7 | |
what is the united states agency for international development usaid | the term united states agency for international development usaid refers to an international development agency run by the united states government the organization provides international development and humanitarian assistance in a number of areas to developing nations while promoting american interests u s national security and economic prosperity abroad 12 usaid was established in 1961 and works in more than 100 countries 1understanding the united states agency for international development usaid the united states agency for international development was developed in 1961 by president john f kennedy he created the agency after signing an executive order to advance american interests abroad through development efforts and humanitarian aid 1 with the global economy still relatively fragile less than two decades after the end of world war ii it was essential for the u s s own prosperity to promote growth in developing countries and to help nations maintain their independence and freedom usaid works in more than 100 developing countries spanning the globe in areas such as sub saharan africa asia the middle east latin america the caribbean europe and eurasia 3 the agency which has field offices in the areas noted above is headquartered in washington d c with organizational units that are called bureaus those working in each unit are responsible for programs and activities in a specific country 4the agency s mission and objectives remain the same today according to the website usaid s mission is to boost democratic values across the world helping nations become self reliant as they progress in their own development 5 while promoting development and reducing poverty are among its aims it also promotes democratic governance in recipient nations and helps counteract the drivers of violence instability transnational crime and other security threats the international agency works in a number of different sectors including development assistance is not simply the act of giving aid but of supporting development efforts so that recipient countries become self reliant some examples of the type of assistance usaid provides in reaching these goals are small enterprise loans technical assistance food and disaster relief and training and scholarships the u s agency for international development usaid is a taxpayer funded agency which means it must report to the american government special considerationsthe agency reports directly to the united states congress on certain important matters this is done through regular reports that the agency submits these reports are also available on the agency s website in order to remain transparent to the general public 6the budget for the united states agency for international development and the u s state department is recommended by the american president for each fiscal year the request for the 2022 fiscal year was 58 5 billion this amount included 27 7 billion managed in part or in full by the agency itself the request furthers the u s s aid to help its partners pursue self reliance and renew their economic growth in addition the budget helps the u s protect its interests abroad among other things 7 | |
what is the united states aircraft insurance group | united states aircraft insurance group usaig is the nation s first aviation insurance company founded in 1928 by world war i flying ace reed mckinley chambers and pilot david c beebe the united states aircraft insurance group was founded when chambers realized a need for aviation insurance after the airline company that he had formed florida airways faced bankruptcy when four airplanes were lost to storms and one accident in 1926 florida airways had earned the first private air mail contract awarded by the united states government understanding usaigon july 1 2018 usaig celebrated its 90th anniversary the insurance company is credited with furthering aviation by insuring historic events such as the first b 52 bomber flight the boeing 707 prototype the 1969 lunar module flight the boeing 747 s first commercial flight and the development and testing of general dynamics f 111a fighter jet in 1968 usaig s founder reed chambers broke the sound barrier while flying in a convair f 106 delta dart usaig also is active in promoting safety in flying and publishes a series of safety first posters several times each year usaig today usaig is neither a single insurance company nor a corporation it s a pool of member firms all highly rated property and casualty insurance and reinsurance companies we re proud to say that our members all carry a m best ratings ranging from a to a the company notes on its website united states aircraft insurance group and canadian aircraft insurance group each comprise a pool of highly rated property casualty insurers united states aviation underwriters a licensed new york agent serves as manager for usaig usau s canadian subsidiary manages the caig pool every policy written through usaig or caig uses capacity that is admitted in all 50 united states or throughout canada each member company must meet minimum ratings requirements at least an a rating with either a m best or standard poor s and hold a required statutory surplus of 1 billion or greater in addition we go the extra step of requiring each member company through a security agreement to fund a trust account to meet 100 percent of their respective net liabilities the company stated the company s line of coverages includes corporate aviation commercial aviation pleasure and business aircraft helicopters airlines airport liability and aviation products liability in 1965 usaig designed and implemented the first insurance policy for an international communications satellite the comsat early bird in 2015 it issued first small unmanned aircraft systems suas policy | |
what is the u s department of agriculture usda | the u s department of agriculture usda is the federal agency that proposes programs and implements policies and regulations related to american farming forestry ranching food quality and nutrition president abraham lincoln founded the usda in 1862 when about half of all americans lived on farms the department now has 29 agencies with wide ranging responsibilities from food safety inspections to economic development for rural communities 1 | |
what does the u s department of agriculture usda do | the usda is made up of 29 agencies and offices which include valuable resources like the forest service the center for nutrition policy and promotion and the national agricultural library its programs help provide the following services among others broadband access in rural areas disaster assistance to farmers ranchers and rural residents soil water and other natural resource conservation to landowners wildfire prevention and agricultural research and statistics 1the usda also is responsible for several social welfare programs including school meal nutrition nutrition education food assistance for women infants and children wic and the food stamp program supplemental nutrition assistance program or snap 2the usda is vital in helping to keep america s farmers and ranchers in business and making sure that the nation s commercial supply of meat poultry and egg products is safe wholesome and properly labeled it also helps to support and ensure the health and care of animals and plants and the health of the land through sustainable management 3the head of the usda is the secretary of agriculture second in charge is the deputy secretary of agriculture who oversees the department s daily operations and budget undersecretaries oversee the divisions for rural development food safety and other areas with nearly 100 000 employees who serve at more than 4 500 locations across the country and abroad 1the usda also works to improve the economy and quality of life in all of rural america usda in rural developmentone of the usda s main tasks is in the area of rural development especially rural housing the usda gives financial assistance for purchasing and refinancing rural homes through usda rural development it provides direct loans to very low income borrowers who want to purchase a rural home guaranteed loans to moderate income homebuyers and loans and grants for rural home improvements and repairs 4usda rural development includes three agencies that provide assistance to rural families and communities in addition to its housing program it has a utilities program and a business program 5 | |
what is the role of the u s department of agriculture usda | the u s department of agriculture usda is a federal agency that plays a major role in rural development particularly housing it also oversees and implements programs related to the farming ranching and forestry industries and regulates food quality and safety and nutrition labeling in addition the usda runs several social welfare programs including free school lunches food stamps and food assistance for women and children | |
how does the u s department of agriculture usda operate | the usda employs 100 000 people at 29 agencies in more than 4 500 locations across the united states and abroad | |
what is the usda office of rural development | the usda office of rural development includes three agencies that provide economic assistance to rural families and communities a housing program a utilities program and a business program the housing program provides guaranteed and direct home loans to help low and moderate income borrowers in rural areas purchase modest homes with no down payment | |
what is united states government life insurance usgli | united states government life insurance usgli is a type of life insurance that was offered by the united states government between 1919 and 1951 this measure which was originally intended to support veterans who served during world war i formed part of a broader set of policies known as the war risk insurance program 1 | |
how united states government life insurance usgli works | the purpose of usgli was to support american soldiers who may have been unable to obtain life insurance at affordable rates from private insurers after all life insurance companies must set their insurance premiums based on the expected frequency and cost of the claims made by their policyholders since soldiers are exposed to a much higher risk of injury or death as compared to other occupations the premiums charged to them under a private insurance plan would likely be very high 1to help support soldiers the united states government created a series of policies called the war risk insurance program one of the central pillars of this program was usgli which effectively subsidized the cost of life insurance for american soldiers the premiums paid under this program were deposited to the united states treasury and were used to cover the claims made by its policyholders 1the usgli program entitled all active military personnel to a life insurance policy payable by the federal government in the case of death or disability caused by war the maximum face amount of a usgli policy was 10 000 the program was closed on april 25 1951 war risk insurance proved to be extremely popular during world war i more than four million policies were issued 1real world example of united states government life insurance usgli usgli was introduced in 1919 as a response to the united states entering world war i as of 2013 there were approximately 8 000 active policies remaining with the policy holder s average age of 88 since jan 1 1983 all usgli policies have been paid up with no further premiums required 1the modern successor of the usgli program is service member group life insurance through this life insurance program united states military personnel can receive insurance coverage for the duration of their service in the military with the premium payments deducted from their regular pay the term of the insurance varies depending on their length of service with additional coverage granted for the 120 days following their departure from service 2 | |
what is the united states natural gas fund ung | the united states natural gas fund ung is an exchange traded fund etf with the stated goal of following the movement of natural gas prices it is the largest natural gas etf with shares available on the nyse arca the fund provides access to investing in natural gas without having to invest in the futures market which is a complicated and risky route for the regular investor understanding the united states natural gas fund ung before etfs became widespread investors had to invest in futures to gain exposure to natural gas which is much more complicated than buying or selling stock on an exchange with the advent of etfs investors became able to easily invest in natural gas without the risk of having to buy or sell futures it is having commodity like exposure without directly investing in the commodity ung is the largest natural gas etf with a futures base its investment goal aims for the daily percentage changes of its net asset value nav to mirror the daily percentage changes of the price of natural gas delivered to henry hub louisiana this is measured with the henry hub natural gas futures contract on the nymex henry hub is the largest gas hub in terms of trading volumes and the benchmark for u s gas futures henry hub gas prices have been falling with the u s shale boom which has been reflected in the performance of ung the u s energy information administration eia believes that prices will increase in the second quarter of 2020 as gas production will slow down and demand for gas will increase for power generation needs ung invests primarily in natural gas futures contracts but also in natural gas related futures as well as forwards and swaps the investments are collateralized by cash cash equivalents and us government obligations with remaining maturities of two years or less the united states natural gas fund ung was introduced in april 2007 by victoria bay asset management now known as united states commodity funds llc and the american stock exchange it is managed by united states commodity funds snapshot of the united states natural gas fund ung as of feb 12 2020 ung has the following profile | |
what is ust | ust is the abbreviation for the united states treasury the federal government division that manages u s finances ust is commonly used to reference debt that is issued by the united states understanding ustthe ust issues securities to raise money to run the federal government some of the government branches operating under the ust umbrella include the internal revenue service irs the u s mint the bureau of the public debt and the alcohol and tobacco tax bureau 1 in addition to treasury bills t bills the u s treasury issues notes bonds floating rate notes frn and u s savings bonds 23traders use the phrases ust yields to refer to treasury yields or ust curve to refer to the treasury yield curve concerning asset pricing the u s treasury is the department of government that is responsible for issuing debt in the form of treasury bonds bills and notes in addition to marketable securities there are also non marketable ust securities these securities are not transferable they cannot be traded on an exchange ust savings bonds fall into this group the function of the u s department of treasury is the management of money and cash flow for the federal government it manages the sources and uses of funds it also works in conjunction with the federal reserve to develop economic policy formally established in 1789 by the first session of congress the institution came into being before the signing of the declaration of independence alexander hamilton was the first secretary of the treasury installed on sept 11 1789 4ust securities and asset pricingmuch of finance is about the pricing of assets ust securities are assumed to have virtually no default risk as a result these securities are often used as a proxy for a risk free asset ust securities set the benchmark for pricing financial assets if ust securities are trading at 3 all other fixed income securities with the same characteristics will trade at some price higher than 3 it is assumed that there is no borrower with better credit than the united states measures of risk can be based on metrics such as debt ratios and price volatility a greater leverage or price volatility leads to a greater risk of either the principal and or the interest not being paid back risk is synonymous with return probabilities as well investments that offer the possibility of making greater returns are priced higher even if that possibility is slim a higher level of risk associated with an investment means a higher possible return a downside to owning ust securities is that due to the lower yield the interest payments an investor s income will be lower | |
what is a united states treasury money mutual fund | a united states treasury money mutual fund is a mutual fund that pools money from investors to purchase low risk government securities a united states treasury money mutual fund is a type of mutual fund that invests primarily or exclusively in u s government debt such as treasury bills and repurchase agreements u s treasury money mutual funds are a leading investment for investors seeking to preserve principal or invest cash temporarily understanding a united states treasury money mutual fundu s treasury money mutual funds are one of the industry s best low risk investments these mutual funds typically invest in u s treasury bills and are highly stable and liquid these funds are generally classified as either money market funds or found in low risk fixed income categories treasury bills are secured by the full faith and credit of the united states treasury which helps to make these portfolios reliable sources of low risk returns due to the country s developed economy and political stability u s government money market fundsmoney managers across the industry offer money market mutual funds that fully invest in u s treasuries u s government money market mutual funds follow standard accounting principles that help to keep their net asset value at 1 per share at amortized cost rather than market value these funds register as money market funds and are governed primarily by rule 2a 7 of the investment company act of 1940 1 the rule stipulates the type of quality the funds can invest in ensuring that only the highest rated debt is included rules cover the maturity credit quality and liquidity of the securities invested under the rule in regards to maturity the average dollar weighted maturity cannot exceed 60 days under liquidity rules 10 of assets must be able to be converted into cash within one day 30 within five days and no more than 5 can be held in securities that take longer than a week to convert into cash 1 rules and regulations for money market funds have been revised to provide even greater security for investors since the 2008 financial crisis when the popular reserve primary fund broke the buck by falling below its 1 net asset value 2 often u s government money market funds managed by brokerage service providers will be offered as cash sweep options or no transaction fee funds some of the most popular u s government money market funds include vanguard treasury money market fund vusxx fidelity treasury only money market fund fdlxx american century capital preservation fund cpfxx u s government mutual fundsmany investment managers across the industry also offer u s government mutual funds that are not characterized by the money market designation but offer many of the same benefits these funds can offer slightly higher returns than money market funds with generally the same risk u s government mutual funds can include short intermediate and long term durations with longer term durations potentially offering enhanced returns some of the most popular u s government mutual funds include | |
what was the united states v the south eastern underwriters association | the term united states v the south eastern underwriters association refers to a landmark u s supreme court case involving the federal antitrust statute and the insurance industry the case was decided on june 5 1944 the supreme court ruled that the industry is subject to regulation by the united states congress under the commerce clause 1 this means that the court determined insurance to be a business that crosses state lines and is therefore subject to antitrust laws 2 congress passed a law a year later exempting the insurance industry from federal scrutiny 3 understanding the u s v the south eastern underwriter associationthe insurance industry is an important part of the financial sector but there have been questions about how insurers should be regulated largely because these companies do business in multiple states the debate of whether insurers should be regulated on a state or federal level became key for lawmakers in the early 20th century the case of u s vs the south eastern underwriter association came before the supreme court on appeal from a northern district of georgia court the south eastern underwriters association had control of 90 of fire and other insurance markets in six southern states this was believed to have given the company an unfair monopoly brought on through price fixing 1 the case focused on whether insurance was a type of interstate commerce that should fall under the united states commerce clause and the sherman antitrust act which was passed into law in 1890 and outlawed monopolies of any kind 4 the supreme court held that insurers that conducted significant portions of their business across state lines actually engaged in interstate commerce the ruling held that the industry could be regulated by federal law 1 the following year congress made a move to overturn the supreme court ruling when it passed the mccarran ferguson act the act prescribed that insurance regulation was a matter for individual states to decide not the federal government the mccarran ferguson act therefore exempted the insurance industry from most federal regulations including antitrust laws 3 special considerationsthe mccarran ferguson act is commonly thought of as a form of regulation but the act neither regulates the insurance industry nor requires states to regulate the products offered by insurance companies rather it offers an act of congress which does not clearly aim to regulate the business of insurance by not preempting state laws or regulations that do regulate insurance transactions 3 the mccarran ferguson act does not regulate the insurance industry competition for interstate insurance remains a key element of health care reform in february 2010 the house of representatives voted to amend the mccarran ferguson act by passing the health insurance industry fair competition act 5 similar attempts to update insurance antitrust provisions are ongoing with efforts to replace or amend the affordable care act aca also known as obamacare former president donald trump also signed the competitive health insurance reform act of 2020 into law on jan 13 2021 6 the bill which was introduced by rep peter defazio d or places restrictions on the insurance industry allowing federal authorities to take action against companies that engage in any behavior that may stifle competition such as price fixing 7 although it was lauded by the department of justice the industry objected saying it added unnecessary financial burden and red tape on insurers 8 7 | |
what is a unitholder | a unitholder is an investor who owns one or more units in an investment trust or master limited partnership mlp a unit is equivalent to a share or piece of interest unitholders are afforded specific rights that are outlined in the trust declaration which governs the trust s actions the most common type of unit trust is an investment vehicle that pools funds from investors to purchase a portfolio of assets these unit trusts invest in many asset classes of stocks large cap small cap domestic international etc bonds investment grade high yield emerging market tax free etc real estate and other securities understanding unitholdersthere is a whole spectrum of risk reward choices for investors in these unit trusts the unitholder gains exposure to a pool of securities and is free to trade units at any time though a unit trust tends to be less liquid than say an exchange traded fund etf and the price of the traded unit may not be equivalent to net asset value nav of the unit trust per share unitholders may also have an interest in a master limited partnership mlp an investment vehicle that offers significant tax advantages to both general and limited partners 1 most mlps are in the energy sector 2 for example pipeline companies prefer the mlp structure to offer preferential tax treatment of cash flows to partners and unitholders what primarily attracts unitholders is the potential for high income yields of mlps 3one difference between unitholders and shareholders is that while unitholders may have some voting rights those rights are often quite a bit more limited than those of corporate shareholders unitholder taxationfor unit trusts unitholders pay income taxes on interest dividends and capital gains distributed to them if the units are held in a taxable account the unit trusts send all unitholders irs form 1099 typically 1099 int or 1099 div 45in the case of master limited partnerships mlps each unitholder s proportion of income gains deductions losses and credits is reported on a schedule k 1 67 if the net amount is positive the unitholder pays tax on a pass through basis whether or not a cash distribution was actually received if there is a net loss the amount can be carried forward and used against future income but only from the same mlp 86the tax cuts and jobs act passed in 2017 introduced a new tax deduction for pass through businesses including unit investment trusts the qualified business income deduction or 199a deduction allows non corporate taxpayers to deduct up to 20 of the qualified business income from each pass through business they own 9example of a unitholderlet s say an investor is interested in being a unitholder in a real estate investment trust reit the investor does their due diligence and decides to purchase shares in prologis inc pld the largest real estate company in the world because they like the assets in the portfolio and its potential for growth in the current market environment 10 all income that the unitholder receives will be taxed as pass through income 6 | |
what is a unitized endowment pool uep | a unitized endowment pool uep is a form of endowment investing that allows multiple endowments to invest in the same pool of assets each endowment owns individual units in a uep and investors generally see their returns monthly new endowments entering the pool can buy in by receiving units in the pool valued as of a specific buy in date understanding a unitized endowment pool uep a unitized endowment pool uep is sort of a mutual fund but it s on a bigger scale and specifically for endowments as opposed to retail investors while even small endowments often have a substantial amount of cash to invest it s sometimes beneficial to pool together with other endowments for diversification uep units serve to clearly segregate each endowment s share in the pool for example a uep with a market value of 10 billion may have 100 000 units worth 100 000 each and split those units among multiple endowments unitized endowment pools are one of three main investing options for endowment funds some choose to invest in ueps exclusively others hire external managers directly the largest tend to hire internal managers to attempt to grow endowment assets a few use a combination of all three the number of endowments that invest in unitized endowment pools and other outside investment managers as opposed to making all decisions in house tends to run in cycles in the decade following the 2007 2009 financial crisis for example more midsize and large endowments hired management expertise from the outside in general in an effort to focus on controlling costs and putting more focus on risk management benefits of a uepsome ueps provide access to less liquid securities such as private equity and stakes in timberland each tends to have attractive returns over time but also carries significant liquidity risks a smaller endowment might not own these assets outside of a unitized endowment pool because they don t have the internal expertise to manage these assets moreover selling units of a unitized endowment pool with a share of these types of assets is sometimes easier and faster than trying to sell illiquid assets directly the school with the largest endowment is harvard university with an endowment of 42 billion in 2020 1some unitized endowment pools also have more experience with emerging markets equity and debt than an endowment fund s own team endowment funds tend to own at least some of these types of assets as many plan to invest for very long time horizons even longer than the average retail investor saving for retirement many endowments choose to take on more risk in search of higher potential rewards that have a better chance of beating inflation over time this could be viewed as a downside but it depends on each endowment s risk tolerance and investment time horizon | |
what are the three types of endowments | in general the three types of endowments are true endowments also known as permanent endowments quasi endowments also known as funds functioning as endowments ffe and term endowments | |
what is a unitized investment | a unitized investment is a type of pooled investment structure that allows investors to purchase units in a pooled investment vehicle such as an investment fund each investor owns a portion of the investment vehicle through their units unitized investments typically have a specific investment concentration or strategy | |
what is an endowment | an endowment is an investment structure for non profit organizations that allows for their donations to be invested in order to generate returns with the ultimate goal of financing their operations | |
what is a unitized fund | a unitized fund is a type of investment fund structure that uses pooled money to invest with individually reported unit values for investors assets in the pool are managed to a specific objective often with concentration in one stock investors are provided with a daily unitized value for their portion of the investment unitized stock funds increase the efficiency of employee stock offerings in benefit plans such as esops their unit price can be generally compared to the price of the company s stock | |
how unitized funds work | unitized funds are often used in employee benefit plans such as pensions employers can offer unitized stock funds that include the company s publicly traded stock this type of unitized fund will typically also include some cash a unitized fund provides for greater efficiency in managing company stock purchase plans offered to investors since the fund is composed of company stock with some cash holdings its unit value will vary from the company s stock share value in the market pension funds may also use a type of unitized structure to offer convertible investments between defined benefit and defined contribution plans participants are given the option to set up individual sub accounts within a unitized structure this gives investors greater flexibility to transfer and exchange assets within their plan unitized funds in insuranceinsurance companies may also use unitized funds the fund represents a collective investment with unit linked fund options for the investors funds invested are associated with investment towards an insurance plan in a unit linked fund the investor designates investment in a specified unit linked fund which is part of a broader collective investment unit linked fund investments vary across the fund however the investments of many unit linked funds are managed collectively together an investor receives reporting on their individual unit linked fund investment which may vary from the values of other funds in the collective the total value of all the funds comprehensively is reported as the total assets for the collective investment these types of funds can usually be found in offshore financial centers in the uk and the british isles unitized fund considerationsgenerally an investment company may also use a special unitized fund structure for fund management if it complies with securities regulation in their individual country overall the structure can provide for efficiency in purchasing shares of securities in the fund with this type of fund investors assets are pooled and the fund calculates a unit value for each participant the unit value typically serves as a comparable value or a personal balance for the investor unitized funds are typically offered as an alternative to mainstream investment options investors should closely examine the prospectus of these types of funds to understand their structure they can provide for efficiencies when managing pooled assets investing in concentrated positions in other cases they require complex record keeping and may include high administrative expenses | |
what is unitranche debt | unitranche debt or financing represents a hybrid loan structure that combines senior debt and subordinated debt into one loan allowing banks to compete better against private debt funds the borrower of this kind of debt typically pays an interest rate that falls between the interest rates that each type of loan would command individually unitranche debt is typically used in institutional funding deals it lets the borrower get funding from multiple parties which can result in decreased costs from multiple issuances allow for greater fundraising through a single deal process and facilitate a faster acquisition in a buyout understanding unitranche debtunitranche debt deals can be structured in several ways the primary focus is on priority repayment levels for the borrowers levels of risk can vary substantially in a structured unitranche debt deal with borrowers agreeing to various priority levels for repayment in case of default unitranche debt may also be compared to syndicated debt both types of debt are structured under an overarching issuance agreement that provides an average cost of debt to the issuer unitranche debt is a type of structured debt that collects funding from multiple participants with varying term structures structured unitranche debt will divide pieces of the structured debt vehicle into tranches each with its own class designation the issuer of the debt typically works with a large investment bank or a group of investment banks to provide the structuring of the debt in an underwriting process the underwriters will determine and document all of the terms of each tranche including details on its interest payments interest rate duration and seniority seniority is typically the primary factor influencing the terms of each tranche level the tranches of the debt can be a dividend and represented by class level names such as the year of issuance followed by a letter for example a unitranche vehicle with four tranches could be structured as 2019 a 2019 b 2019 c and 2019 d providing an identifier for lenders that want to invest in the vehicle underwriters structure the tranches by seniority with the lowest risk tranches having the highest seniority for repayment in case of default these tranches are also known as secured tranches each tranche will have differing levels of seniority if the issuer defaults some unitranche vehicles may also rate various tranches to support the marketing and disclosure of tranche sales underwriters can also structure each tranche with varying terms individual tranches can thus be customized and created with different provisions that are favorable for the issuer provisions may include call rights full repayment at the principal with no coupon and floating vs fixed rates unitranche debt vs syndicated loanin some cases a syndicated loan may also be considered a type of unitranche debt a syndicated loan is similar to a unitranche loan in that it involves multiple lenders making an investment syndicated loans also involve underwriters and an extensive underwriting process in a syndicated loan the lenders all typically agree to similar terms however some syndicated loans may include individual loan portions to each lender considered as tranches overall syndicated loans are typically less complex in their structuring than unitranche debt | |
what is the primary focus of unitranche debt | the primary focus of unitranche debt is on priority repayment levels for the borrowers levels of risk can vary substantially in a structured unitranche debt deal with borrowers agreeing to various priority levels for repayment in case of default | |
how is unitranche debt like syndicated debt | both types of debt are structured under an overarching issuance agreement that provides an average debt cost to the issuer |
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