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what is the ipo process | the ipo process essentially consists of two parts the first is the pre marketing phase of the offering while the second is the initial public offering itself when a company is interested in an ipo it will advertise to underwriters by soliciting private bids or it can also make a public statement to generate interest the underwriters lead the ipo process and are chosen by the company a company may choose one or several underwriters to manage different parts of the ipo process collaboratively the underwriters are involved in every aspect of the ipo due diligence document preparation filing marketing and issuance advantages and disadvantages of an ipothe primary objective of an ipo is to raise capital for a business it can also come with other advantages as well as disadvantages one of the key advantages is that the company gets access to investment from the entire investing public to raise capital this facilitates easier acquisition deals share conversions and increases the company s exposure prestige and public image which can help the company s sales and profits increased transparency that comes with required quarterly reporting can usually help a company receive more favorable credit borrowing terms than a private company companies may confront several disadvantages to going public and potentially choose alternative strategies some of the major disadvantages include the fact that ipos are expensive and the costs of maintaining a public company are ongoing and usually unrelated to the other costs of doing business fluctuations in a company s share price can be a distraction for management which may be compensated and evaluated based on stock performance rather than real financial results additionally the company becomes required to disclose financial accounting tax and other business information during these disclosures it may have to publicly reveal secrets and business methods that could help competitors rigid leadership and governance by the board of directors can make it more difficult to retain good managers willing to take risks remaining private is always an option instead of going public companies may also solicit bids for a buyout additionally there can be some alternatives that companies may explore can raise additional funds in the future through secondary offeringsattracts and retains better management and skilled employees through liquid stock equity participation e g esops ipos can give a company a lower cost of capital for both equity and debtsignificant legal accounting and marketing costs arise many of which are ongoingincreased time effort and attention required of management for reportingthere is a loss of control and stronger agency problemsipo alternativesa direct listing is when an ipo is conducted without any underwriters direct listings skip the underwriting process which means the issuer has more risk if the offering does not do well but issuers also may benefit from a higher share price a direct offering is usually only feasible for a company with a well known brand and an attractive business in a dutch auction an ipo price is not set potential buyers can bid for the shares they want and the price they are willing to pay the bidders who were willing to pay the highest price are then allocated the shares available investing in an ipo | |
when a company decides to raise money via an ipo it is only after careful consideration and analysis that this particular exit strategy will maximize the returns of early investors and raise the most capital for the business therefore when the ipo decision is reached the prospects for future growth are likely to be high and many public investors will line up to get their hands on some shares for the first time ipos are usually discounted to ensure sales which makes them even more attractive especially when they generate a lot of buyers from the primary issuance | initially the price of the ipo is usually set by the underwriters through their pre marketing process at its core the ipo price is based on the valuation of the company using fundamental techniques the most common technique used is discounted cash flow which is the net present value of the company s expected future cash flows underwriters and interested investors look at this value on a per share basis other methods that may be used for setting the price include equity value enterprise value comparable firm adjustments and more the underwriters do factor in demand but they also typically discount the price to ensure success on the ipo day it can be quite hard to analyze the fundamentals and technicals of an ipo issuance investors will watch news headlines but the main source for information should be the prospectus which is available as soon as the company files its s 1 registration 3 the prospectus provides a lot of useful information investors should pay special attention to the management team and their commentary as well as the quality of the underwriters and the specifics of the deal successful ipos will typically be supported by big investment banks that can promote a new issue well overall the road to an ipo is a very long one as such public investors building interest can follow developing headlines and other information along the way to help supplement their assessment of the best and potential offering price the pre marketing process typically includes demand from large private accredited investors and institutional investors which heavily influence the ipo s trading on its opening day investors in the public don t become involved until the final offering day all investors can participate but individual investors specifically must have trading access in place the most common way for an individual investor to get shares is to have an account with a brokerage platform that itself has received an allocation and wishes to share it with its clients performance of iposseveral factors may affect the return from an ipo which is often closely watched by investors some ipos may be overly hyped by investment banks which can lead to initial losses however the majority of ipos are known for gaining in short term trading as they become introduced to the public there are a few key considerations for ipo performance if you look at the charts following many ipos you ll notice that after a few months the stock takes a steep downturn this is often because of the expiration of the lock up period when a company goes public the underwriters make company insiders such as officials and employees sign a lock up agreement lock up agreements are legally binding contracts between the underwriters and insiders of the company prohibiting them from selling any shares of stock for a specified period the period can range anywhere from three to 24 months ninety days is the minimum period stated under rule 144 sec law but the lock up specified by the underwriters can last much longer 4 the problem is when lockups expire all the insiders are permitted to sell their stock the result is a rush of people trying to sell their stock to realize their profit this excess supply can put severe downward pressure on the stock price some investment banks include waiting periods in their offering terms this sets aside some shares for purchase after a specific period the price may increase if this allocation is bought by the underwriters and decrease if not flipping is the practice of reselling an ipo stock in the first few days to earn a quick profit it is common when the stock is discounted and soars on its first day of trading closely related to a traditional ipo is when an existing company spins off a part of the business as its standalone entity creating tracking stocks the rationale behind spin offs and the creation of tracking stocks is that in some cases individual divisions of a company can be worth more separately than as a whole for example if a division has high growth potential but large current losses within an otherwise slowly growing company it may be worthwhile to carve it out and keep the parent company as a large shareholder then let it raise additional capital from an ipo from an investor s perspective these can be interesting ipo opportunities in general a spin off of an existing company provides investors with a lot of information about the parent company and its stake in the divesting company more information available for potential investors is usually better than less so savvy investors may find good opportunities in this type of scenario spin offs can usually experience less initial volatility because investors have more awareness ipos are known for having volatile opening day returns that can attract investors looking to benefit from the discounts involved over the long term an ipo s price will settle into a steady value which can be followed by traditional stock price metrics like moving averages investors who like the ipo opportunity but may not want to take the individual stock risk may look into managed funds focused on ipo universes but also look out for so called hot ipos that could be more hype than anything else | |
what is the purpose of an initial public offering | an ipo is essentially a fundraising method used by large companies in which the company sells its shares to the public for the first time following an ipo the company s shares are traded on a stock exchange some of the main motivations for undertaking an ipo include raising capital from the sale of the shares providing liquidity to company founders and early investors and taking advantage of a higher valuation can anybody invest in an ipo oftentimes there will be more demand than supply for a new ipo for this reason there is no guarantee that all investors interested in an ipo will be able to purchase shares those interested in participating in an ipo may be able to do so through their brokerage firm although access to an ipo can sometimes be limited to a firm s larger clients another option is to invest through a mutual fund or another investment vehicle that focuses on ipos | |
is an ipo a good investment | ipos tend to garner a lot of media attention some of which is deliberately cultivated by the company going public generally speaking ipos are popular among investors because they tend to produce volatile price movements on the day of the ipo and shortly thereafter this can occasionally produce large gains although it can also produce large losses ultimately investors should judge each ipo according to the prospectus of the company going public as well as their financial circumstances and risk tolerance | |
what is inorganic growth | inorganic growth arises from mergers or takeovers rather than an increase in the company s own business activity firms that choose to grow inorganically can gain access to new markets through successful mergers and acquisitions inorganic growth is considered a faster way for a company to grow compared to organic growth | |
how is inorganic growth achieved | firms can choose to grow inorganically in several ways including engaging in mergers and acquisitions and in the case of retail or branch organizations opening new stores or branches mergers are challenging from an integration perspective acquisitions can be accretive to earnings but the implementation of the technology or knowledge acquired can take time in other words pulling the value out of mergers and acquisitions is more complex than taking credit for sales costs in the form of restructuring charges can greatly increase expenses the purchase price of the acquisition can also be prohibitive for some firms by opening new stores in profitable locations businesses can take advantage of the higher growth rates associated with new stores however when new stores are placed in locations that cannibalize sales and or do not have enough traffic to support those stores they can be a drag on sales inorganic growth vs organic growth | |
which is best inorganic or organic growth inorganic growth such as a boost from acquisitions can provide a short term boost however steady and slow organic growth can be viewed as superior as it shows the company has the ability to make money regardless of the economic backdrop plus there s the downside of potentially using debt to fund inorganic growth on the flipside inorganic growth might not fully repair declining organic growth or internal issues | one of the most important measures of performance for fundamental analysts is growth particularly in sales sales growth can be the result of promotional efforts new product lines and improved customer service which are internal or organic measures growth in organic sales is often described in terms of comparable sales or same store sales when referring to retail outlets in other words these sales occur naturally and not through the acquisition of another company or the opening of new stores some analysts consider organic sales to be a better indicator of company performance a company may have positive sales growth due to acquisitions while same store sales growth may decline due to a decrease in foot traffic analysts research organic sales by analyzing inorganic sales growth advantages and disadvantages of inorganic growthif a company merges with another in pursuit of inorganic growth that company s market share and assets become larger this offers immediate benefits such as the additional skills and expertise of new staff and a greater likelihood of obtaining capital when needed as well it allows a company to grow much faster and almost immediately increase its market share however there are disadvantages in that additional management is required the direction of the business may go in an unanticipated direction there may be additional debt or a company could grow too quickly incurring substantial risk the downsides to inorganic growth is the large upfront costs and management challenges with integrating acquisitions | |
what is an example of inorganic growth | consider that company a is looking to leverage an inorganic growth strategy company a acquires a software startup that provides a new technology that its competitors don t yet provide in doing so company a now offers its customers new technologies and gains access to new markets that were established by the acquired company | |
is m a inorganic growth | yes mergers acquisitions are a form of inorganic growth as the company takes external measures to grow the company by combining with another firm | |
what is balanced growth | in short balanced growth involves using organic growth to build the company as well as inorganic growth in acquiring other companies to help boost growth acquisitions can lead to faster sales growth and quicker cashflow but may be unpredictable organic growth is advantageous because it is familiar and inherent to the company although sales may not be as robust | |
do companies with more organic growth outperform those with higher inorganic growth | according to a study from mckinsey s p 500 companies that had higher organic growth tended to outperform companies with the least organic growth when assessed at comparable growth levels | |
what are common forms of inorganic growth | based on a survey of 1 300 ceos by pwc 40 said they were planning on targeting a joint venture to boost revenues 37 were considering a merger or acquisition 32 were planning on working with startups and 14 were planning on selling a business | |
what is input output analysis | input output analysis i o is a form of macroeconomic analysis based on the interdependencies between different economic sectors or industries this method is commonly used for estimating the impacts of positive or negative economic shocks and analyzing the ripple effects throughout an economy i o economic analysis was originally developed by wassily leontief 1906 1999 who later won the nobel memorial prize in economic sciences for his work in this area understanding input output analysisthe foundation of i o analysis involves input output tables such tables include a series of rows and columns of data that quantify the supply chain for all sectors of an economy industries are listed in the headers of each row and each column the data in each column corresponds to the level of inputs used in that industry s production function for example the column for auto manufacturing shows the resources required for building automobiles e g the amount of steel aluminum plastic electronics and so on i o models typically include separate tables showing the amount of labor required per dollar unit of investment or production while input output analysis is not commonly utilized by neoclassical economics or by policy advisers in the west it has been employed in marxist economic analysis of coordinated economies that rely on a central planner three types of economic impacti o models estimate three types of impact direct indirect and induced these terms are another way of referring to initial secondary and tertiary impacts that ripple throughout the economy when a change is made to a given input level by using i o models economists can estimate the change in output across industries due to a change in inputs in one or more specific industries example of input output analysishere s an example of how i o analysis works a local government wants to build a new bridge and needs to justify the cost of the investment to do so it hires an economist to conduct an i o study the economist talks to engineers and construction companies to estimate how much the bridge will cost the supplies needed and how many workers will be hired by the construction company the economist converts this information into dollar figures and runs numbers through an i o model which produces the three levels of impacts the direct impact is simply the original numbers put into the model for example the value of the raw inputs cement steel etc the indirect impact is the jobs created by the supplying companies so cement and steel companies these companies need to hire workers to complete the project they either have the funds to do so or have to borrow the money to do so which would have another impact on banks the induced impact is the amount of money that the new workers spend on goods and services for themselves and their families this includes basics such as food and clothing but now that they have more disposable income it also relates to goods and services for enjoyment the i o analysis studies the ripple effects on various sectors of the economy caused by the local government wanting to build a new bridge the bridge may require certain costs from the government utilizing taxes but the i o analysis will show the benefits the project generates by hiring companies that hire workers that spend in the economy helping it to grow | |
what is insead | one of the world s top graduate business schools insead has campuses in france singapore san francisco and the middle east abu dhabi founded in 1957 insead is an acronym for institut europ en d administration des affaires today insead is recognized around the world as one of the top business schools on the planet the school has 165 faculty members from 42 countries with more than 1 500 students in its various degree programs each year the school also has more than 11 000 executives that participate in its executive education programs each year 12history of inseadinsead was established in 1955 when the paris chamber of commerce decided to start a european business school four years later it took in its first mba students in 1960 52 students from 14 different countries graduated from the school s mba program in 1968 insead began offering its executive program for the first time the school s ph d program was launched in 1989 345the school opened its asian campus in singapore in 2000 and its middle east campus in abu dhabi in 2010 in 2020 insead announced a new hub located in san francisco ca to establish a north american presence 6insead campusesthe school s main campus in france is located in fontainebleau near paris the second campus located in asia is in singapore in the buona vista district 15 minutes from the financial district the third campus in abu dhabi in the united arab emirates was inaugurated in 2010 786programs offered at inseadinsead offers a variety of graduate and doctoral programs in addition to the standard curricula offered below the school also offers customized programs in collaboration with corporations seeking to grant executive education to their managers 9insead offers a 10 month fully accelerated term of study for an mba with intake in january and august students are required to take core subjects including finance economics accounting business ethics and marketing as well as electives from a pool of 75 different course offerings roughly 94 of graduates were employed in their field three months after graduation 10111213this program is offered at the school s france abu dhabi and singapore campuses for experienced executives an intensive 14 to 17 month modular program it includes group coaching team activities and 360 degree assessments a typical gemba class has 222 students each with an average of 14 years of work experience 14this program spans 18 months with eight modules that last three to four days each students focus on human behavior and organizational dynamics the objectives of the program include learning how to increase self awareness becoming an effective agent for organizational change learning new coaching methodologies and getting a better understanding of organizational behavior a typical emc class has 30 participants across the france and singapore campuses 15this program is for working professionals and lasts 18 months intake is on the asia campus the program consists of six modules that last two weeks each taking place three to four months apart a typical emfin has 35 participants with an average of 9 5 years of work experience 16this program comes as a result of a partnership between insead and tsinghua a university based in beijing students can pursue this degree at the france singapore and abu dhabi insead campuses or at tsinghua 17the most rigorous degree offered is a five year program that prepares students who wish to work in academia in business the first two years are dedicated to course study while the remaining three are intended for research and dissertation work intake happens in europe or asia with an exchange through the wharton school in the united states 18the program has a maximum of 18 open places each year collaboration is encouraged between different academic areas to offer more depth for research students are given lucrative financial support which includes scholarships and living allowances 18insead also offers a certificate in business foundations the insead sorbonne unviersit certificate programme is aimed at recent master s and doctoral graduates 19 | |
is insead better than harvard | depending on the publication insead can be considered a better mba degree than harvard according to the financial times in 2023 insead ranked number two for best mba programs while harvard ranked number four 2 | |
how much does insead cost | the cost for insead for starting the program in aug 2023 is 97 000 for starting the program in jan 2024 it is 98 500 this does not include living expenses living expenses in france add another 25 000 20 | |
is insead an ivy league school | no insead is not an ivy league school ivy league schools are a certain grouping of specific schools in the u s schools outside of the u s such as insead are not part of the ivy league the bottom lineinsead is a top business graduate school with its central campus in france along with locations in singapore north america and the middle east the school offers a variety of business graduate degrees and is considered to be one of the world s leading business schools | |
what is an inside day | an inside day is a two day price pattern that occurs when a second day has a range that is completely inside the first day s price range the high of the second day is lower than the first and the low of the second is higher than the first inside days show a contraction in volatility and are often a continuation pattern this means that following the inside day the price will often continue moving in the same direction after the pattern as it did before that said the pattern is common and frequently insignificant inside days may be contrasted with outside days understanding inside daysinside days are common on a daily chart they may occur several times per month in many assets this means that many inside days will provide little information to a trader and will not result in a significant price move following the pattern an inside day shows that volatility has dropped from the prior day the market is taking a pause this is why the pattern is often considered a continuation pattern in the encyclopedia of chart patterns thomas bulkowski found that in over 29 000 samples of the pattern the price continued in the same direction it entered the pattern 62 of the time | |
when attempting to trade the pattern the best results tend to come with trading it as a continuation pattern for example if looking to buy a stock it should be a bull market the stock should be trending higher when it forms the inside day and then the price should exit the pattern to the upside | in the example above the trader could buy when the price moves above the top of the pattern which is the high of the first candle of the two bar pattern the inside day pattern does not have a profit target attached to it traders can utilize other methods to collect profits such as a trailing stop loss risk reward ratio an indicator or moving average or looking for other candlestick patterns to signal an exit example of an inside daythe following chart shows multiple inside days in bank of america corporation stock this shows how common the pattern can be not all inside days result in a significant price move following the pattern image by sabrina jiang investopedia 2021the first two patterns occur during a price rise the price then breaks above the pattern and continues to the upside ideally this is the structure desired for a long trade for the inside days that follow some are preceded by a price advance or decline while others occur when the price is moving predominately sideways traders could have avoided some of the poor signals by only taking a trade if the breakout occurs in the same direction as the price direction that preceded the two day pattern | |
what is indemnity | indemnity is a comprehensive form of insurance compensation for damage or loss when the term indemnity is used in the legal sense it may also refer to an exemption from liability for damage indemnity is a contractual agreement between two parties in this arrangement one party agrees to pay for potential losses or damage a typical example is an insurance contract in which the insurer or the indemnitor agrees to compensate the other the insured or the indemnitee for any damage or losses in return for premiums paid by the insured to the insurer with indemnity the insurer indemnifies the policyholder that is promises to make whole the individual or business for any covered loss investopedia laura porter | |
how indemnity works | an indemnity clause is standard in the majority of insurance agreements however exactly what is covered and to what extent depends on the specific agreement any indemnity agreement has what is called a period of indemnity or a specific length of time for which the payment is valid similarly many contracts include a letter of indemnity which guarantees that both parties will meet the contract stipulations or else an indemnity must be paid indemnity is common in agreements between an individual and a business for example an agreement to obtain car insurance however it can also apply on a larger scale to relationships between businesses and government or between governments of two or more countries indemnity clauses can be complicated to negotiate and can lead to increased costs of services because of the increased risk of the contract sometimes governments a business or an entire industry must take on the costs of larger issues on behalf of the public such as outbreaks of disease for example according to reuters congress authorized 1 billion to fight a bird flu epidemic that devastated the u s poultry industry in 2014 and 2015 the u s department of agriculture spent 200 million of that money on indemnity payments paid to farmers who needed to kill their birds to stop the spread of the virus special considerationsindemnity may be paid in the form of cash or by way of repairs or replacement depending on the terms of the indemnity agreement for example in the case of home insurance the homeowner pays insurance premiums to the insurance company in exchange for the assurance that the homeowner will be indemnified if the house sustains damage from fire natural disasters or other perils specified in the insurance agreement in the event that the home is damaged significantly the insurance company will be obligated to restore the property to its original state either through repairs by authorized contractors or reimbursement to the homeowner for spending on such repairs indemnity insurance is a way for a company or individual to obtain protection from indemnity claims this insurance protects the holder from having to pay the full sum of an indemnity even if the holder is responsible for the cause of the indemnity many companies make indemnity insurance a requirement as lawsuits are common everyday examples include malpractice insurance which is common coverage for those in the medical field and errors and omissions insurance e o which protects companies and their employees against claims made by clients and applies to any given industry some companies also invest in deferred compensation indemnity insurance which protects the money that companies expect to receive in the future as with any other form of insurance indemnity insurance covers the costs of an indemnity claim including but not limited to court costs fees and settlements the amount covered by insurance depends on the specific agreement and the cost of the insurance depends on many factors including the policyholder s history of indemnity claims property leases also include indemnity clauses for example in the case of a rental property a tenant is typically responsible for damage due to negligence fines lawyer fees and more depending on the agreement an act of indemnity protects those who have acted illegally from being subject to penalties this exemption typically applies to public officers such as police officers or government officials who are sometimes compelled to commit illegal acts in order to carry out the responsibilities of their jobs often such protection is granted to a group of people who committed an illegal act for the common good such as the assassination of a known dictator or terrorist leader history of indemnityalthough indemnity agreements haven t always had a formal name they are not a new concept historically indemnity agreements have served to ensure cooperation between individuals businesses and governments in 1825 haiti was forced to pay france what was then called an independence debt the payments were intended to cover the losses that french plantation owners suffered after losing land and slaves while this form of indemnity was incredibly unjust it is one example of many historical cases that show the ways indemnity has been applied worldwide another common form of indemnity is the reparations a winning country seeks from a losing country after a war depending on the amount and extent of the indemnity due it can take years and even decades to pay off one of the most well known examples is the indemnity germany paid after its role in world war i those reparations were finally paid off in 2010 almost a century after they were assessed | |
what is indemnity in insurance | indemnity is a comprehensive form of insurance compensation for damage or loss it amounts to a contractual agreement between two parties in which one party agrees to pay for potential losses or damage caused by another party | |
what is the purpose of indemnity | indemnification or indemnity designates one party the indemnifying party as being required to compensate the other party the indemnified party for certain costs and expenses typically stemming from third party damage claims | |
what is the rule of indemnity in insurance | with indemnity insurance one party commits to compensate another for prospective loss or damage in insurance policies in exchange for premiums paid by the insured to the insurer the insurer offers to compensate the insured for any potential damage or losses the bottom lineindemnity is a type of insurance compensation paid for damage or loss when the term is used in the legal sense it also may refer to an exemption from liability for damage indemnity is a contractual agreement between two parties in which one party agrees to pay for potential losses or damage caused by another party typically an insurance contract dictates that the insurer also known as the indemnitor agrees to compensate the other party involved the insured or the indemnitee for any damage or losses in return for premiums paid by the insured | |
what are inside sales | inside sales refers to the sale of products or services by personnel who reach customers through phone email or the internet other ways to define inside sales are remote sales or virtual sales it is called inside because these sales reps remain indoors often at a call center or company office inside sales may or may not be outsourced to a third party vendor inside sales can be contrasted with outside sales where people physically go out and meet potential customers understanding inside salesunlike outside sales personnel inside salespeople traditionally do not travel despite this they are still proactive about contacting potential customers and may engage in cold calling however a company may also designate incoming calls from prospective customers as inside sales in addition a company may outsource its inside sales duties to a third party instead of conducting sales in house the advent of the telephone and its use as a sales tool gave birth to the distinction between inside and outside sales the term inside sales was created in the 1980s to differentiate telemarketing or telesales from high ticket phone sales common with business to business b2b and business to consumer b2c sales practices unlike telemarketers who read from scripts inside sales reps are highly trained creative people who determine a sales strategy for selling products and services to customers by the late 1990s or early 2000s the term inside sales was being used to mark a difference between inside and outside sales sometimes inside and outside sales personnel and practices work together for greater efficiency for example an inside sales individual within a department may handle the legwork of creating and organizing sales appointments for outside sales personnel otherwise known as lead generation in some cases inside sales personnel may be used to upsell incumbent customers by adding ancillary products or services to their order the inside sales segment is among the fastest growing segments of sales and lead generation advantages of inside salespurchasing goods and services online or by phone is popular among consumers looking for ways to simplify their lives it even has its own industry association the american association of inside sales professionals aa isp meanwhile the ways most inside and outside salespeople operate are converging increasingly outside salespeople are making more sales remotely and inside salespeople are occasionally going out in the field this convergence is aided by the adoption of new sales facilitating technologies as well as changing customer buying habits and attitudes about how products and services are sold this has led to a new moniker for inside sales sales in the cloud the role of the inside sales representativeinsider sales reps often earn a modest base salary followed by sales commissions and performance bonuses because inside sales will take place online over the phone representatives may want experience in telemarketing or customer support and develop a pleasant demeanor when calling strangers one perk of inside sales is that you can often do the job remotely or from home in 2021 according to payscale com the median base salary for an inside sales representative is about 45 000 with 10 receiving a maximum salary of 66 000 however salary differences can vary greatly among companies for example oracle corp pays its inside sales reps an average salary of 50 565 while state farm insurance company offers its sales reps an average salary of 29 661 according to payscale s data it is common for companies to outsource inside sales to third party specialists like call centers telemarketers or online sales specialists | |
what is inside sales vs outside sales | inside sales relies on an indoors salesforce to market and sell the company s products or services online or over the phone outside sales uses in person techniques such as meeting clients face to face knocking on doors or setting up physical booths at conventions or conferences | |
is cold calling used with inside sales | cold calling is when a salesman or marketers solicits a potential customer who has had no prior interaction with the company or salesperson consumers tend to dislike cold calling finding it impersonal and potentially disruptive as a result the success rate for cold calling is very low and federal regulations now exist to limit the extent of cold calls including the national do not call register nevertheless cold calling can be one strategy used with inside sales to reach more individuals and stay proactive | |
is inside sales the same as telemarketing | telemarketing or telesales involves selling over the phone or by email often using cold calls and is one aspect of inside sales on whole inside sales encompasses a broader range of sales marketing tools and techniques including social media marketing mobile marketing search engine optimization seo and customer relationship management crm the bottom lineinside sales relies on professionals selling products and services from behind a desk in an office call center or from home inside sales uses telephone email and other online methods to make contact with prospective clients and close sales with the growth of e commerce inside sales involving social media and driving web based traffic has become a priority for many companies including legacy brick and mortar retailers | |
what is insider information | insider information is a fact about a public company s plans or finances that has not yet been revealed to shareholders and that could give an unfair advantage to its possessors if acted upon buying or selling stock based on insider information can be a criminal offense insider information is usually available to executives working within or close to a public company understanding insider informationa limited number of people inside a company inevitably know about an event that will once it is revealed will significantly affect the company s stock price it might be a pending merger a product recall a shortfall in earnings or the failure of a major project in extreme cases it might be a financial scandal that is about to burst into public view the people who are in the know are not just sworn to confidentiality they are forbidden by law to take advantage of that knowledge by buying or selling stock in the company or by passing along the information to someone else who takes advantage of it insider trading is illegal when the material information has not been made public and has been traded on 1 it is seen as an unfair manipulation of the free market to give an advantage to certain parties ultimately it undermines confidence in the integrity of the market and can dampen economic growth regulating insider information and tradinga person who uses insider information to place trades or advises a third party to place trades based on the information can be found guilty of insider trading obviously company insiders own stock and they buy and sell shares from time to time not all insider trading is illegal in the u s the securities and exchange commission sec regulates legal insider trades trading in company stock by its executives directors and employees is subject to regulations encoded in the 1934 securities exchange act 1the enforceable definition of insider trading has been expanded since the law s passage through a series of high profile securities fraud rulings and loophole closing legislation for instance in 2000 the congress passed regulation fair disclosure regulation fd which was meant to curb selective disclosure of information by companies to some shareholders or other traders it stipulates that any time a firm is disclosing previously non public information to an interested party they must make that information public and available to all traders 1the sec prosecutes trading based on insider information as a serious fraud crime and individuals found guilty can be heavily fined or imprisoned the business mogul and media personality martha stewart was indicted in 2003 on securities fraud and other charges after trading to avoid a loss based on insider information she was imprisoned for five months and paid a disgorgement of 45 673 plus prejudgment interest of 12 389 and a civil penalty of 137 019 3 | |
what is insider trading | insider trading involves trading in a public company s stock or other securities by someone with non public material information about the company insider transactions are legal if the insider makes a trade and reports it to the securities and exchange commission but insider trading is illegal when the material information is still non public those who commit insider trading face harsh consequences so it s important to know what it is and how to avoid it if you own company shares and have information that can affect other investors investopedia mira norianunderstanding insider tradingthe u s securities and exchange commission sec defines illegal insider trading as material information is any information that could substantially impact an investor s decision to buy or sell the security non public information is information that is not legally available to the public the question of legality stems from the sec s attempt to maintain a fair marketplace an individual with access to insider information would have an unfair edge over other investors who do not have the same access and could potentially make larger and thus unfair profits than their fellow investors the securities exchange act of 1934 was the first step in requiring the disclosure of company stock transactions directors executives or anyone else who has information or who holds more than 10 of any class of a company s securities are considered insiders by the sec 2anyone who becomes an insider must file sec form 3 initial statement of beneficial ownership of securities within 10 days of assuming an insider role 3if an insider makes a transaction they must file form 4 statement of changes in beneficial ownership within two business days of making the transaction this form serves to notify the public that an insider acted on a security 4sec form 5 annual statement of changes in beneficial ownership of securities is required no later than 45 days after a company s fiscal year ends the sec requires its filing only if one or more transactions exempted from form 4 were not reported during the year 2if you meet the definition of an insider and file the forms trading your company shares is called an insider transaction it is only considered illegal insider trading when you don t follow the rules illegal insider trading includes an insider by sec definition not submitting the required forms after making a transaction it also includes passing along material non public information before it is made publicly available for example suppose you work for xyz company and learn that it is about to post losses in its quarterly report which can affect investors you tell a friend who owns shares in the company and they sell their shares a few days before the report is published and share prices drop right after it is you and your friend may be guilty of insider trading even though neither of you is classified as an insider by definition you acted on information that could affect other investors when they didn t have the information 1examples of insider tradinginsider trading is nothing new it has been going on for as long as stock markets have existed however there are some notable recent examples worth mentioning directors of companies are not the only people who have the potential to be convicted of insider trading for example in 2003 martha stewart was charged by the sec with obstruction of justice and securities fraud including insider trading for her part in the 2001 imclone case stewart sold close to 4 000 shares of biopharmaceutical company imclone systems based on information from peter bacanovic a broker at merrill lynch bacanovic s tip came after imclone systems chief executive officer ceo samuel waksal sold all his company shares this came around the time imclone was waiting on the food and drug administration fda for a decision on its cancer treatment erbitux shortly after these sales the fda rejected imclone s drug causing shares to fall 16 in one day the early sale by stewart saved her a loss of 45 673 however the sale was made based on a tip she received about waksal selling his shares which was not public information after a 2004 trial stewart was charged with lesser crimes of obstruction of a proceeding conspiracy and making false statements to federal investigators stewart served five months in a federal corrections facility 5in september 2017 former amazon com inc amzn financial analyst brett kennedy was charged with insider trading authorities said kennedy gave fellow university of washington alumni maziar rezakhani information on amazon s 2015 first quarter earnings before the release rezakhani paid kennedy 10 000 for the information in a related case the sec said rezakhani made 115 997 trading amazon shares based on the tip from kennedy 6 | |
has insider trading a negative connotation | the term insider trading generally has a negative connotation based on the perception that it is unfair to the average investor essentially insider trading involves trading in a public company s stock by someone with non public material information about that stock insider trading is illegal but if an insider trades their holdings and reports it properly it is an insider transaction which is legal | |
when is insider trading illegal | insider trading is deemed illegal when the material information is still non public and comes with harsh consequences including potential fines and jail time material non public information is defined as any information that could substantially impact that company s stock price | |
when is insider trading legal | legal insider transactions happen in the stock market all the time the question of legality stems from the sec s attempt to maintain a fair marketplace it is legal for company insiders to trade company stock as long as they report these trades to the sec on time the bottom lineinsider trading is when non published information from a company is used to make a trading decision by someone with an invested interest in that company it is illegal to engage in insider trading but it is legal to trade your company shares as long as you follow the guidelines set by the sec | |
what is insolvency | insolvency is when an individual or company can no longer meet their financial obligations to lenders as debts become due before an insolvent company or person gets involved in insolvency proceedings they may be involved in informal arrangements with creditors such as setting up alternative payment arrangements insolvency can arise from poor cash management a reduction in cash inflow or an increase in expenses investopedia theresa chiechi | |
how insolvency works | insolvency is a state of financial distress in which a business or person is unable to pay their bills 1insolvency can lead to insolvency proceedings in which legal action will be taken against the insolvent person or entity and assets may be liquidated to pay off outstanding debts business owners may contact creditors directly and restructure debts into more manageable installments creditors are typically amenable to this approach because they want to be repaid and avoid losses even if the repayment is on a delayed schedule if a business owner plans on restructuring the company s debt they assemble a realistic plan showing how they can reduce company overhead and continue carrying out business operations the owner creates a proposal detailing how the debt may be restructured using cost reductions or other plans for support the proposal shows creditors how the business may produce enough cash flow for profitable operations while paying its debts typically a forgiven debt may be considered income by the internal revenue service irs however if a taxpayer is deemed insolvent any forgiven debts are excluded from their income eliminating the need to pay taxes on those amounts 2factors contributing to insolvencythere are numerous factors that can contribute to a person s or company s insolvency a company s hiring of inadequate accounting or human resources management may contribute to insolvency for example the accounting manager may improperly create and or follow the company s budget resulting in overspending expenses add up quickly when too much money is flowing out and not enough is coming into the business rising vendor costs can also contribute to insolvency when a business has to pay increased prices for goods and services the company passes along the cost to the consumer rather than pay the increased cost many consumers take their business elsewhere so they can pay less for a product or service losing clients results in losing income for paying the company s creditors lawsuits from customers or business associates may lead a company to insolvency the business may end up paying large amounts of money in damages and be unable to continue operations when operations cease so does the company s income lack of income results in unpaid bills and creditors requesting money owed to them some companies become insolvent because their goods or services don t evolve to fit consumers changing needs when consumers begin doing business with other companies offering larger selections of products and services the company loses profits if it doesn t adapt to the marketplace expenses exceed revenues and bills remain unpaid types of insolvency include cash flow insolvency and balance sheet insolvency cash flow insolvency happens when a company has the assets to cover their debts but they are in the wrong form such as real estate instead of liquid funds balance sheet insolvency on the other hand indicates a lack of assets in any form to cover debts 3insolvency vs bankruptcyinsolvency is a type of financial distress meaning the financial state in which a person or entity is no longer able to pay the bills or other obligations the irs states that a person is insolvent when the total liabilities exceed total assets 2a bankruptcy on the other hand is an actual court order that depicts how an insolvent person or business will pay off their creditors or how they will sell their assets in order to make the payments a person or corporation can be insolvent without being bankrupt even if it s only a temporary situation if that situation extends longer than anticipated it can lead to bankruptcy | |
what is the difference between debt restructuring and debt consolidation | debt restructuring is when you take steps to avoid defaulting on debt such as negotiating a lower interest rate or new terms that make payments more affordable debt consolidation is when you combine multiple loans into one new loan often to achieve better terms | |
is insolvency the same thing as bankruptcy | insolvency is not the same as bankruptcy although a company that has become insolvent may file for bankruptcy insolvency is the state of not being able to pay your obligations while bankruptcy is a legal process to discharge your debts 4the bottom lineinsolvency is a state where a debtor cannot pay their debts and it can occur for a number of reasons understanding the factors that can lead to insolvency such as overspending can help you prevent insolvency and its consequences | |
what is an installment debt | an installment debt is a loan that is repaid by the borrower in regular installments an installment debt is generally repaid in equal monthly payments that include interest and a portion of the principal this type of loan is an amortized loan that requires a standard amortization schedule to be created by the lender detailing payments throughout the loan s duration understanding installment debtan installment debt is a favored method of consumer financing for big ticket items such as homes cars and appliances lenders also favor installment debt since it offers a steady cash flow to the issuer throughout the loan with regular payments based on a standard amortization schedule the amortization schedule will determine the size of the monthly installment debt payments the amortization schedule is created based on several variables including the total principal issued the interest rate charged any down payment and the total number of payments for example few can afford to pay off the price of a home in a single payment therefore a loan is issued with a principal amount covering the home s value and is amortized with monthly installment payments over a period mortgage loans are typically structured with a 15 year payment schedule or a 30 year payment schedule as a result mortgage borrowers can make steady installment debt payments over the life of the loan which helps to make purchasing a home more affordable conversely an appliance that costs 1 500 can be paid off in a year by most people the buyer can further reduce the monthly payments by making a substantial down payment of 500 for instance in this case assuming an interest rate of 8 the equal monthly payments over one year would be approximately 87 which means the total financing cost over the one year period is about 44 on the other hand if the buyer does not have the resources for a down payment and finances the total 1 500 cost of the appliance for one year at 8 the monthly payments would be 130 50 the total financing cost in this case is a little higher at 66 installments loans are often lower risk loans than loans without installment payments special considerationsan installment loan is one of the most traditional loan products offered by lenders lenders can build a standard amortization schedule and receive monthly cash flow from both principal and interest payments on the loans in addition high quality loans can be accepted as qualified loans receiving certain protections and offering the opportunity for sale on the secondary market which increases a bank s capital installments loans can generally be much lower risk than other alternative loans that do not have installment payments these loans can include balloon payment loans or interest only loans these alternative loans are not structured with a traditional amortization schedule and are issued with a much higher risk than standard installment loans types of installment debttraditional loans from financial institutions for homes and automobiles are a prominent source of lending business for lenders most of these loans are based on conservative underwriting with standard amortization schedules that pay down principal and interest with each installment payment alternative installment debt loans are also offered by a variety of higher risk alternative lenders in the credit market payday loans are one example they charge higher interest rates and base the principal offered on a borrower s employer and per paycheck income these loans are also paid with installments based on an amortization schedule however their underlying components involve much higher risks in 2014 the dodd frank act instituted legislation for qualified mortgages this provided lending institutions with more significant incentives to structure and issue higher quality mortgage loans standard installment repayment terms are one requirement for qualified mortgages in addition as a qualified mortgage loan it is eligible for certain protections and is also more appealing to underwriters in secondary market loan product structuring installment debt vs personal loansan installment loan is a financial vehicle in which a lender agrees to be paid back in installments versus one payment for example a mortgage payment is a type of installment loan repaid by the borrower in monthly installments that include principal and interest federal loans for education and mortgages are two types of common installment loans an installment debt is money owed on an installment loan an installment loan is a type of personal loan but there are other kinds of personal loans including payments repaid in full with interest rather than in installments a personal loan can come from a bank a credit union a boss or a member of your family advantages and disadvantages of installment debtlike any loan there are advantages and disadvantages to taking on installment debt for example if you want to buy a house an installment loan is a great way to borrow a large sum of money and pay it back over time on the other hand if you hate the idea of being in long term debt borrowing and then paying a personal loan off in full may be more appealing an installment debt is paid off on a regular schedule set by the lender an installment loan allows you to budget your money each month while you are paying off your debt in some cases when you have signed up to pay your loan off using installment payments you will be charged with a penalty fee if you decide to pay it off early in addition installment loans take time to pay off making them a financial commitment installment loans allow the borrower to pay off their loan over time installment loans provide a way to borrow large sums of money to purchase big ticket items like a home installment debt is usually a set amount each month making it easier on your budget installment debt is usually very high making it difficult to pay off in one payment installment debt includes interest which adds up over the years some lenders may charge a penalty fee if you pay off your loan in full the bottom linean installment debt is a type of loan repaid by the borrower in regular often monthly payments that include the interest owed plus a portion of the principal an installment debt is an amortized loan and has a standard amortization schedule created by the lender that shows the borrower how much they will owe over the life of the loan mortgages and student loans are often forms of installment debt and allow borrowers to gain access to large sums of money an installment debt is less risky than borrow large amounts that must be paid off in full with interest in a short amount of time installment debt faqsan irs installment agreement is a plan used to pay the irs via installments any tax you owe them the irs issues a charge of one half of a 1 rate on unpaid taxes up to 10 days afterward the interest rises to 1 but if you file your return by its due date and request an installment agreement the one half of 1 rate decreases to one quarter of 1 for any month in which an installment agreement is in effect according to its website 1an installment sale is a sale of property where you receive at least one payment beyond the tax year of the sale however installment sale rules don t apply if you sell your property at a loss 2like any loan if you don t pay back what you owe you can find yourself in a lot of financial trouble if you default on your mortgage for example you can lose your home in addition if you don t pay your installment loan the fees interest and potential penalty charges will increase by not paying your loans you risk damaging your credit as well it is possible to get an installment loan with bad credit but you find yourself saddled with a higher interest rate on the loan if your credit is below 600 if you shop around for a loan you may find one even if your credit is considered bad by one of the big three credit bureaus 3 however you may not qualify for a mortgage which is a type of installment loan with a score lower than 550 4 | |
what is the institute for supply management ism | the term institute for supply management ism refers to a nonprofit supply management association established in 1915 it is the largest organization of its kind it provides certification development education and research for individuals and corporations in the supply management and purchasing professions the goal of the ism is to help advance supply management to drive value and competitive advantage 1 the organization publishes the ism manufacturing report on business understanding the institute for supply management ism the institute for supply management was founded in 1915 as the national association of purchasing agents 2 the organization operated as such until 2002 when it officially changed its name to the ism 3 as noted above it is the largest organization that serves members of the supply management and the purchasing industries as of 2021 the organization had more than 50 000 members across 100 countries 1 the association offers services to industry professionals and corporations 4 the ism s leadership is comprised of individuals who work in supply management 5the ism provides professionals with certifications career help training and peer networking members can earn two highly sought after designations from the institute and become a certified professional in supply management cpsm and a certified professional in supplier diversity cpsd individuals must recertify through continuing education work experience volunteering or exams 8the organization releases its report on business which includes the manufacturing purchasing managers index pmi and the services or non manufacturing pmi these two indexes are published monthly by the ism manufacturing and services business survey committees they and are considered to be among the most reliable economic indicators the committees also release a monthly hospital pmi 9professionals with a cpsm designation can earn as much as 10 more than their industry peers 7special considerationssupply management is often considered to be the way in which businesses purchase and use the raw materials they need to produce their finished goods while this is just one part of the definition there s actually more to it than that supply management is a complex process that requires personnel to tackle the following personnel who work in supply management and purchasing must also be adept at coordinating the logistics involved with preproduction inventory management budgeting workforce management and ensuring that the business runs smoothly | |
what is the institute of management accountants | the institute of management accountants ima is one of the top associations for financial professionals it offers the prestigious certified management accountant cma designation the ima s mission is to promote education and development in management accounting and finance advocate for the highest ethics and best business practices and provide a forum for research the institute of management accountants ima is a global membership association of accountants and financial professionals who work at nonprofit private and public companies and academic institutions in 2019 the institute celebrated its 100th anniversary 2 the organization s vision is to be the leading resource for certifying supporting maturing and linking the world s best financial professionals and accountants the association s core values include integrity and trust passion respect innovation and continuous improvement it achieves these core values by providing access to career opportunities building a network of industry professionals and developing partner connections it offers educational programs to increase leadership opportunities and expand professional knowledge ima provides a forum for members by promoting forward thinking research and industry best practices and offering newsletters and journals 1understanding the imaima provides services in the americas middle east africa asia pacific and europe 3 it has offices in china switzerland zurich netherlands amsterdam singapore united arab emirates dubai 4 and egypt cairo 56 as of sept 21 2022 the ima had approximately 140 000 members in 150 countries the association has over 350 professional and student chapters worldwide 1 members can achieve career development through access to one of ima s local chapters the association strives to raise awareness of the management accounting sector ima operates an online training center that provides educational materials it also offers professional education products members receive career development training through local chapters continuing education information and resources and participate in online communities historysince 1919 ima has been an advocate and resource for accounting and financial management professionals it was founded in buffalo new york to promote knowledge and professionalism among cost accountants and promote a wider understanding of the role of cost accounting in management the original name of the association was the national association of cost accountants but in 1957 the name was changed to the national association of accountants in 1991 the name was changed again to the institute of management accountants 7the first chapter was formed in chicago in 1920 and the first annual conference was held in atlantic city in 1972 the association created the cma certification program in 1983 it issued the first code of ethics for management accountants in the united states titled standards of ethical conduct of management accountants in 1996 ima established the certified financial manager program but discontinued it in 2007 87membership benefitsima offers membership benefits such as publications conferences and research on industry trends and advancements ima membership also offers discounts on business and professional expenses such as office supplies insurance rental cars and training | |
what is the institutional brokers estimate system ibes | the institutional brokers estimate system ibes is a database used by brokers and active investors to access the estimates made by stock analysts regarding the future earnings of publicly traded american companies ibes is often written as i b e s understanding the ibesibes serves as a central location for all current analyst estimates for stocks it also incorporates company guidance the estimates of projected future earnings that companies publish on a quarterly and annual basis and update periodically as needed the first iteration of the ibes database was created by a brokerage firm in 1976 and traded hands several times landing at financial analytics firm primark before being purchased by thomson reuters in 2000 213the database provides summary information and detailed projections gathered from analysts and brokers from the major international brokerages as well as local independent analysts it draws on analyst estimates on performance measures for companies across all industries these include estimates of revenue earnings per share price targets net debt enterprise value and net income among other factors users can break down data by year by fiscal quarter and by other timeframes that are used to measure and anticipate a company s performance the database includes recommendations from the analysts on whether to buy hold or sell shares in the public companies they cover ibes is designed to be a centralized system to assist decision making about securities | |
how ibes is used | ibes aims to be a concise centralized system to aid in decision making about securities it allows for access to a broader consensus estimate rather than relying on the narrow judgments that can be made from day to day as analysts publish their reports ibes can be used in a variety of ways forecast models for earnings per share results for instance can be created using ibes as a benchmark the database also is used in accounting research ibes spinoffsthomson reuters has other distinct databases based on ibes for example ibes guidance data and earnings estimates are available to academics at the wharton school of the university of pennsylvania to review and evaluate expectations for companies 4 an ibes historical database is used to compare and test investment theories the ibes is one of a number of databases used by money managers and investors the center for research on security prices has developed databases for stock prices including daily and monthly market information research and historical data advantages and disadvantages of ibesibes aggregates earnings estimates from a wide array of sell side analysts including those from investment banks brokerage firms and other financial institutions this extensive coverage spans various industries sectors and geographic regions meaning there s a lot of different information available for many different purposes ibes consolidates analysts earnings estimates into a single database this saves investors time by acting as a centralized platform for getting forecasts and relevant information it also provides stability and accessibility into historical earnings estimates and revisions ibes updates its database regularly with the latest earnings estimates ensuring that investors have access to up to date information you can consider ibes data to be near real time not only will you have quick access to information ibes implements validation checks data cleaning procedures and verification of credentials to make sure any input data is correct ibes relies on earnings estimates provided by sell side analysts it s important to note that these folks may have biases or conflicts of interest as they may be incentivized to maintain relationships with the companies they cover or their employers this the data fed into ibes may be optimistic or pessimistic estimates that do not accurately reflect underlying fundamentals the specific methodologies used by individual analysts to formulate their forecasts may not always be transparent this lack of transparency can make it difficult for investors to assess the reliability and credibility of the estimates plus even though there are data checks ibes data may still be subject to errors or mistakes while ibes updates its database regularly there may still be delays in reflecting analysts revisions to earnings estimates in an industry where everyone is fighting for the same information having small lags in data accessibility may be detrimental in addition ibes may have limited coverage for smaller companies or companies in niche industries you may not always have access to the specific information you re looking for wide analyst coverage for diverse industriessimplifies research with centralized standardized dataaccess to historical trends aids forecast evaluationprovides timely updates for informed decisionsensures data accuracy through quality controlanalyst biases influence forecast accuracylack of transparency in forecasting methodologiesestimates prone to errors and variabilitypotential delays in reflecting revisionslimited coverage for smaller companies niche industries | |
what does ibes stand for | in the financial markets ibes or i b e s stands for the institutional brokers estimate system a financial database containing equity analysts estimates and reports on most publicly traded companies who owns ibes ibes is owned by the financial data and media company thomson reuters which it acquired in 2000 when thomson reuters purchased the primark company 52 | |
what kind of data is found in an ibes report | in addition to analysts recommendations ibes reports contain a wealth of company financial data including earnings eps forecasts company guidance and kpis key performance indicators | |
how can i access ibes data | ibes is available through various subscription services offered by thomson reuters including its refinitiv thomson one and eikon platforms 6the bottom lineibes or the institutional brokers estimate system aggregates earnings estimates from sell side analysts providing comprehensive coverage across various industries it offers investors timely access to consolidated and customizable data aiding in informed decision making and evaluation of market expectations | |
what is an institutional investor | an institutional investor is a company or organization that invests money on behalf of other people mutual funds pensions and insurance companies are examples institutional investors often buy and sell substantial blocks of stocks bonds or other securities and for that reason are considered to be the whales on wall street the group is also viewed as more sophisticated than the average retail investor and in some instances they are subject to less restrictive regulations investopedia michela buttignolthe role of institutional investorsan institutional investor buys sells and manages stocks bonds and other investment securities on behalf of its clients customers members or shareholders broadly speaking there are six types of institutional investors endowment funds commercial banks mutual funds hedge funds pension funds and insurance companies institutional investors face fewer protective regulations compared to average investors because it is assumed the institutional crowd is more knowledgeable and better able to protect themselves institutional investors have the resources and specialized knowledge for extensively researching a variety of investment opportunities not open to retail investors because institutions are moving the biggest positions and are the largest force behind supply and demand in securities markets they perform a high percentage of transactions on major exchanges and greatly influence the prices of securities in fact institutional investors today make up more than 90 of all stock trading activity 1institutional investors account for about 80 of the s p 500 total market capitalization according to data from pensions investment online 2since institutional investors can move markets retail investors often research institutional investors regulatory filings with the securities and exchange commission sec to determine which securities the retail investors should buy personally in other words some investors attempt to mimic the buying of the institutional crowd by taking the same positions as the so called smart money retail investors vs institutional investorsretail and institutional investors are active in a variety of markets like bonds options commodities forex futures contracts and stocks however because of the nature of the securities and the manner in which transactions occur some markets are primarily for institutional investors rather than retail investors examples of markets primarily for institutional investors include the swaps and forward markets retail investors typically buy and sell stocks in round lots of 100 shares or more institutional investors are known to buy and sell in block trades of 10 000 shares or more 3 because of the larger trade volumes and sizes institutional investors sometimes avoid buying stocks of smaller companies for two reasons first the act of buying or selling large blocks of a small thinly traded stock can create sudden supply and demand imbalances that move share prices higher and lower in addition institutional investors typically avoid acquiring a high percentage of company ownership because performing such an act may violate securities laws for example mutual funds closed end funds and exchange traded funds etfs that are registered as diversified funds are restricted as to the percentage of a company s voting securities that the funds can own | |
what is the world s largest asset manager | the largest private asset manager is blackrock which holds about 10 trillion in assets under management as of 2022 note that most of these assets are held in the name of blackrock s clients they are not owned by blackrock itself 4 | |
what qualifies as an institutional investor | an institutional investor is an entity that makes investments on behalf of someone else they gather insight and analytical data from institutional shareholder services iss providers that help them make informed shareholder decisions institutional investor examples include pension funds mutual funds insurance companies university endowments and sovereign wealth funds | |
how do institutional investors make money | institutional investors make money by charging fees and commissions to their members or clients for example a hedge fund may charge a certain percentage of a client s investment gains or total assets there may also be flat fees for holding an account or making trades or withdrawals | |
what is an accredited investor | an accredited investor usually described as a sophisticated investor they are someone with enough experience or wealth to make certain risky investments that are not available or permitted to the general public in the united states an accredited investor must have a net worth of over 1 million excluding the value of their primary residence the bottom lineinstitutional investors are the big fish on wall street and can move markets with their large block trades the group is generally considered more sophisticated than the retail crowd and often subject to less regulatory oversight institutional investors are usually not investing their own money but making investment decisions on behalf of clients shareholders or customers | |
what is an instrument | an instrument is a means by which something of value is transferred held or accomplished in the field of finance an instrument is a tradable asset or a negotiable item such as a security commodity derivative or index or any item that underlies a derivative in separate contexts an instrument can alternatively refer to an economic variable that can be controlled or altered by government policymakers to effect a change in other economic indicators it can also refer to a legal document such as a contract will or deed understanding instrumentsinternational accounting standards ias defines financial instruments as any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity basically any asset purchased by an investor can be considered a financial instrument antique furniture wheat and corporate bonds are all equally considered investing instruments in that they can all be bought and sold as things that hold and produce value instruments can be debt or equity representing a share of liability a future repayment of debt or ownership an instrument in essence is a type of contract or medium that serves as a vehicle for an exchange of some value between parties the values of cash instruments financial securities that are exchanged for cash like a share of stock are directly influenced and determined by markets these can be securities that are easily transferable the value and characteristics of derivative instruments are derived from their components such as an underlying asset interest rate or index | |
what is insurable interest | insurable interest is a type of investment that protects anything subject to a financial loss a person or entity has an insurable interest in an item event or action when the damage or loss of the object would cause a financial loss or other hardships to have an insurable interest a person or entity would take out an insurance policy protecting the person item or event in question the insurance policy would mitigate the risk of loss if something happens to the asset like becoming damaged or lost insurable interest is an essential requirement for issuing an insurance policy that makes the entity or event legal valid and protected against intentionally harmful acts people not subject to financial loss do not have an insurable interest therefore a person or entity cannot purchase an insurance policy to cover themselves if they are not actually subject to the risk of financial loss 1understanding insurable interestinsurance is a method of pooled risk exposure that protects policyholders from financial losses insurers have created many tools to cover losses related to various factors such as automobile expenses health care expenses loss of income through disability loss of life and damage to property insurable interest specifically applies to people or entities where there is a reasonable assumption of longevity or sustainability barring any unforeseen adverse events insurable interest insures against the prospect of a loss to this person or entity 1 for example a corporation may have an insurable interest in the chief executive officer ceo and an american football team may have an insurable interest in a star franchise quarterback further a business may have an insurable interest in its c suite officers but not its average employees property insurable interesthomeowners insurance compensates a policyholder who suffers a significant financial loss if a fire or other destructive force destroys his or her home the homeowner has an insurable interest in the property losing that home would create a catastrophic loss for the policyholder it is reasonable for the homeowner to expect longevity regarding the ownership of the house the homeowner is therefore insuring against the possibility that something unforeseeable causes damage 2a policyholder may buy property insurance for their own home but not the house across the street purchasing homeowners insurance for a neighbor s house creates an incentive to cause damage to that house and collect the insurance proceeds appropriate underwriting would not create such a temptation which represents a moral hazard whereby parties have an incentive to allow or even affect a loss 2the principle of indemnity and insurable interestthe indemnification principle holds that insurance policies should compensate a policyholder for a covered loss but losses should not reward or penalize holders indemnification suggests that insurers should design policies to cover the value of the at risk asset appropriately 3 poorly conceived or designed policies create a moral hazard which increases the costs to insurance companies and drives premiums to unsustainable levels for policyholders 4real world example of insurable interestinsurable interest is also necessary in life insurance though this has not always been the case there are cases where people have purchased life insurance policies for elderly acquaintances strictly because they expect that person s imminent death life insurance regulations have evolved to require a relationship in which the policy owner will suffer a financial loss in the event of the insured s death hardship may include immediate family members more distant blood relatives romantic partners creditors and business associates the face value of life insurance policies must not exceed the human life value of the insured otherwise the indemnity principle would be violated creating a moral hazard 5also a policy may not be written without the knowledge of the insured person this was the case in september 2018 when a california couple was accused of committing three counts of insurance fraud in order to receive 1 million in life insurance benefits husband and wife peter and jin kim purchased life insurance on one of mr kim s clients and listed mrs kim as the client s beneficiary niece on a second policy mrs kim appeared as the sister of the policyholder mr kim a licensed insurance agent also did not inform the company that the client had a diagnosed terminal illness when he submitted the applications 6 | |
is insurable interest required for insurance policies | yes insurable interest is essentially proof that an individual or entity would experience financial or other hardships as the result of damage to or loss of an item or person this is evaluated during the underwriting process to ensure this direct link such proof of insurable interest is required for all insurance policies | |
what is moral hazard | a moral hazard is when someone with an insurance policy is incentivized to cause loss or damage in order to collect on the insurance for instance somebody who is terminally ill may seek a life insurance policy knowing it will payout when they pass away soon after acquiring it having insurable interest helps minimize moral hazard | |
why can t i take out a life insurance policy on just anybody | unless you have insurable interest you cannot take out a life insurance policy on that individual if so you could essentially place bets on or else profit from the death of otherwise random individuals family members and dependents are often justifiable as having insurable interest so are business partners borrowers and key employees in certain cases | |
what is insurance | insurance is a contract represented by a policy in which a policyholder receives financial protection or reimbursement against losses from an insurance company the company pools clients risks to make payments more affordable for the insured most people have some insurance for their car their house their healthcare or their life insurance policies hedge against financial losses resulting from accidents injury or property damage insurance also helps cover costs associated with liability legal responsibility for damage or injury caused to a third party 1investopedia daniel fishel | |
how insurance works | many insurance policy types are available and virtually any individual or business can find an insurance company willing to insure them for a price common personal insurance policy types are auto health homeowners and life insurance most individuals in the united states have at least one of these types of insurance and car insurance is required by state law businesses obtain insurance policies for field specific risks for example a fast food restaurant s policy may cover an employee s injuries from cooking with a deep fryer medical malpractice insurance covers injury or death related liability claims resulting from the health care provider s negligence or malpractice a company may use an insurance broker of record to help them manage the policies of its employees businesses may be required by state law to buy specific insurance coverages 2most insurance is regulated at the state level there are also insurance policies available for very specific needs such coverage includes business closures due to civil authority kidnap ransom and extortion k r insurance identity theft insurance and wedding liability and cancellation insurance insurance policy componentsunderstanding how insurance works can help you choose a policy for instance comprehensive coverage may or may not be the right type of auto insurance for you three components of any insurance type are the premium policy limit and deductible a policy s premium is its price typically a monthly cost often an insurer takes multiple factors into account to set a premium here are a few examples 3much depends on the insurer s perception of your risk for a claim for example suppose you own several expensive automobiles and have a history of reckless driving in that case you will likely pay more for an auto policy than someone with a single midrange sedan and a perfect driving record however different insurers may charge different premiums for similar policies so finding the price that is right for you requires some legwork the policy limit is the maximum amount an insurer will pay for a covered loss under a policy maximums may be set per period e g annual or policy term per loss or injury or over the life of the policy also known as the lifetime maximum typically higher limits carry higher premiums for a general life insurance policy the maximum amount that the insurer will pay is referred to as the face value this is the amount paid to your beneficiary upon your death the federal affordable care act aca prevents aca compliant plans from instituting a lifetime limit for essential healthcare benefits such as family planning maternity services and pediatric care 4the deductible is a specific amount you pay out of pocket before the insurer pays a claim deductibles serve as deterrents to large volumes of small and insignificant claims for example a 1 000 deductible means you pay the first 1 000 toward any claims suppose your car s damage totals 2 000 you pay the first 1 000 and your insurer pays the remaining 1 000 deductibles can apply per policy or claim depending on the insurer and the type of policy health plans may have an individual deductible and a family deductible policies with high deductibles are typically less expensive because the high out of pocket expense generally results in fewer small claims types of insurancethere are many different types of insurance let s look at the most important health insurance helps covers routine and emergency medical care costs often with the option to add vision and dental services separately in addition to an annual deductible you may also pay copays and coinsurance which are your fixed payments or percentage of a covered medical benefit after meeting the deductible however many preventive services may be covered for free before these are met 5health insurance may be purchased from an insurance company an insurance agent the federal health insurance marketplace provided by an employer or federal medicare and medicaid coverage the federal government no longer requires americans to have health insurance but in some states such as california you may pay a tax penalty if you don t have insurance 6if you have chronic health issues or need regular medical attention look for a health insurance policy with a lower deductible though the annual premium is higher than a comparable policy with a higher deductible less expensive medical care year round may be worth the tradeoff homeowners insurance also known as home insurance protects your home other property structures and personal possessions against natural disasters unexpected damage theft and vandalism homeowner insurance won t cover floods or earthquakes which you ll have to protect against separately policy providers usually offer riders to increase coverage for specific properties or events and provisions that can help reduce deductible amounts these adders will come at an additional premium amount renter s insurance is another type of homeowners insurance your lender or landlord will likely require you to have homeowners insurance coverage where homes are concerned you don t have coverage or stop paying your insurance bill your mortgage lender is allowed to buy homeowners insurance for you and charge you for it 7auto insurance can help pay claims if you injure or damage someone else s property in a car accident help pay for accident related repairs on your vehicle or repair or replace your vehicle if stolen vandalized or damaged by a natural disaster instead of paying out of pocket for auto accidents and damage people pay annual premiums to an auto insurance company the company then pays all or most of the covered costs associated with an auto accident or other vehicle damage if you have a leased vehicle or borrowed money to buy a car your lender or leasing dealership will likely require you to carry auto insurance as with homeowners insurance the lender may purchase insurance for you if necessary 8a life insurance policy guarantees that the insurer pays a sum of money to your beneficiaries such as a spouse or children if you die in exchange you pay premiums during your lifetime there are two main types of life insurance term life insurance covers you for a specific period such as 10 to 20 years if you die during that period your beneficiaries receive a payment permanent life insurance covers your whole life as long as you continue paying the premiums 9travel insurance covers the costs and losses associated with traveling including trip cancellations or delays coverage for emergency health care injuries and evacuations damaged baggage rental cars and rental homes 10 however even some of the best travel insurance companies do not cover cancellations or delays due to weather terrorism or a pandemic they also don t often cover injuries from extreme sports or high adventure activities | |
what is insurance | insurance is a way to manage your financial risks when you buy insurance you purchase protection against unexpected financial losses the insurance company pays you or someone you choose if something bad occurs if you have no insurance and an accident happens you may be responsible for all related costs 1 | |
why is insurance important | insurance helps protect you your family and your assets an insurer will help you cover the costs of unexpected and routine medical bills or hospitalization accident damage to your car or injury of others and home damage or theft of your belongings an insurance policy can even provide your survivors with a lump sum cash payment if you die in short insurance can offer peace of mind regarding unforeseen financial risks | |
is insurance an asset | depending on the type of life insurance policy and how it is used permanent or variable life insurance could be considered a financial asset because it can build cash value or be converted into cash simply put most permanent life insurance policies have the ability to build cash value over time 11the bottom lineinsurance helps to protect you and your family against unexpected financial costs and resulting debts or the risk of losing your assets insurance helps protect you from expensive lawsuits injuries and damages death and even total losses of your car or home sometimes your state or lender may require you to carry insurance although there are many insurance policy types some of the most common are life health homeowners and auto the right type of insurance for you will depend on your goals and financial situation | |
what is an insurance claim | an insurance claim is a formal request by a policyholder to an insurance company for coverage or compensation for a covered loss or policy event the insurance company validates the claim or denies the claim if it is approved the insurance company will issue payment to the insured or an approved interested party on behalf of the insured insurance claims cover everything from death benefits on life insurance policies to routine and comprehensive medical exams in some cases a third party is able to file claims on behalf of the insured person however in the majority of cases only the person s listed on the policy is entitled to claim payments investopedia nono flores | |
how an insurance claim works | a paid insurance claim serves to indemnify a policyholder against financial loss an individual or group pays premiums as consideration for the completion of an insurance contract between the insured party and an insurance carrier the most common insurance claims involve costs for medical goods and services physical damage loss of life liability for the ownership of dwellings homeowners landlords and renters and liability resulting from the operation of automobiles for property and causality insurance policies regardless of the scope of an accident or who was at fault the number of insurance claims you file has a direct impact on the rate you pay to gain coverage typically through installment payments called insurance premiums the greater the number of claims that are filed by a policyholder the greater the likelihood of a rate hike in some cases it s possible if you file too many claims that the insurance company may decide to deny you coverage if the claim is being filed based on the damage to property that you caused your rates will almost surely rise on the other hand if you aren t at fault your rates may or may not increase for example getting hit from behind when your car is parked or having siding blow off your house during a storm are both events that are clearly not the result of the policyholder however mitigating circumstances such as the number of previous claims you have filed the number of speeding tickets you have received the frequency of natural disasters in your area earthquakes hurricanes floods and even a low credit rating can all cause your rates to go up even if the latest claim was made for damage you didn t cause | |
when it comes to insurance rate increases not all claims are created equal dog bites slip and fall personal injury claims water damage and mold can all act as signals of future liability for an insurer these items tend to have a negative impact on your rates and on your insurer s willingness to continue providing coverage surprisingly speeding tickets may not cause a rate hike at all at least for your first speeding ticket many companies will not increase your prices the same goes for a minor automobile accident or a small claim against your homeowner s insurance policy | types of insurance claimscosts for surgical procedures or inpatient hospital stays remain prohibitively expensive individual or group health policies indemnify patients against financial burdens that may otherwise cause crippling financial damage health insurance claims filed with carriers by providers on behalf of policyholders require little effort from patients the majority of medical are adjudicated electronically policyholders must file paper claims when medical providers do not participate in electronic transmittals but charges result from rendered covered services ultimately an insurance claim protects an individual from the prospect of large financial burdens resulting from an accident or illness a house is typically one of the largest assets an individual will purchase in their lifetime a claim filed for damage from covered perils is initially routed via the internet to a representative of an insurer commonly referred to as an agent or claims adjuster unlike health insurance claims the onus is on the policyholder to report damage to a deeded property they own an adjuster depending on the type of claim inspects and assesses damage to property for payment to the insured upon verification of the damage the adjuster initiates the process of compensating or reimbursing the insured life insurance claims require the submission of a claim form a death certificate and oftentimes the original policy the process especially for large face value policies may require in depth examination by the carrier to ensure that the death of the insured did not fall under a contract exclusion such as suicide usually excluded for the first few years after policy inception or death resulting from a criminal act generally the process takes approximately 30 to 60 days without extenuating circumstances affording beneficiaries the financial wherewithal to replace the income of the deceased or simply cover the burden of final expenses filing an insurance claim may raise future insurance premiums special considerationsthere are no hard and fast rules around rate hikes what one company forgives another won t forget because any claim at all may pose a risk to your rates understanding your policy is the first step toward protecting your wallet if you know your first accident is forgiven or a previously filed claim won t count against you after a certain number of years the decision of whether or not to file a claim can be made with advanced knowledge of the impact it will or won t have on your rates talking to your agent about the insurance company s policies long before you need to file a claim is also important some agents are obligated to report you to the company if you even discuss a potential claim and choose not to file for this reason you also don t want to wait until you need to file a claim to inquire about your insurer s policy regarding consultation with your agent regardless of your situation minimizing the number of claims you file is the key to protecting your insurance rates from a substantial increase a good rule to follow is to only file a claim in the event of catastrophic loss if your car gets a dent on the bumper or a few shingles blow off of the roof of your house you may be better off if you take care of the expense on your own if your car is totaled in an accident or the entire roof of your house caves in filing a claim becomes a more economically feasible exercise just keep in mind that even though you have coverage and have paid your premiums on time for years your insurance company can still decline to renew your coverage when your policy expires | |
how do i initiate an insurance claim | if you hold an insurance policy and have experienced damages covered by it you can initiate a claim by contacting your insurer this can be done by phone and increasingly online once the claim has been started the insurer will collect relevant information from you and may ask for evidence such as photos or supporting documentation the insurer may also send an adjuster to interview you and evaluate the merits of your claim | |
why does filing a claim increase insurance premiums | sometimes filing a claim can result in higher insurance premiums going forward although this is not always the case as some insurers will forgive the first accident for example rate hikes following a claim are mainly due because the insurer will see you as a greater risk than before and adjust the cost upwards accordingly if you can prove that a claim was made where you were not at fault you may be able to reverse such an increase if you file too many claims over a very short period of time the insurance company may not renew your policy regardless of fault | |
should i file an insurance claim if the damage is less than my deductible | if the damage you experience is less than your deductible it may not make sense to file a claim with your insurance company for instance if you have 200 in estimated damage but a 1 000 deductible it wouldn t make sense if however you feel that the other party is entirely at fault and want their insurance to pay for your damage you may want to initiate a claim nonetheless it is a good idea to always talk with your insurance agent before filing a claim | |
what is insurance coverage | insurance coverage is the amount of risk or liability that is covered for an individual or entity by way of insurance services insurance coverage such as auto insurance life insurance or more exotic forms such as hole in one insurance is issued by an insurer in the event of unforeseen occurrences skynesher getty imagesunderstanding insurance coverageinsurance coverage helps consumers recover financially from unexpected events such as car accidents or the loss of an income producing adult supporting a family in exchange for this coverage the insured person pays a premium to the insurance company insurance coverage and its costs are often determined by multiple factors premiums are a way for the insurance company to manage risk when there s an increased possibility that an insurance company may have to pay out money toward a claim they can offset that risk by charging a higher premium for example most insurers charge higher premiums for young male drivers as insurers deem the probability of young men being involved in an accident to be higher than say a middle aged married man with years of driving experience insurance companies use the underwriting process to evaluate you for risk and use the information they collect to set your premiums main types of insurance coveragethere are different types of insurance coverage someone may need here are some of the most common options for insuring yourself and your property auto insurance can protect you in the event of an accident in all 50 states excluding new hampshire drivers are required to have minimum amounts of liability insurance coverage this includes both bodily injury liability coverage and property damage liability coverage bodily injury liability coverage pays for the medical expenses of another person if they re injured in an accident for which you are at fault property damage liability coverage pays for damages to someone else s property when you re at fault in an accident depending on where you live you may also be required to have auto insurance premiums typically depend on the insured party s driving record a record free of accidents or serious traffic violations may result in a lower premium drivers with histories of accidents or serious traffic violations may pay higher premiums likewise because mature drivers tend to have fewer accidents than less experienced drivers insurers typically charge more for drivers below age 25 if a person drives his car for work or typically drives long distances he generally pays more for auto insurance premiums because his increased mileage likewise increases his chances for accidents people who do not drive as much pay less because of higher vandalism rates thefts and accidents urban drivers pay higher premiums than those living in small towns or rural areas other factors varying among states include the cost and frequency of litigation medical care and repair costs the prevalence of auto insurance fraud and weather trends options for saving money on auto insurance premiums include asking about safe driver discounts and bundling coverage with homeowners or other types of insurance life insurance is designed to provide a measure of financial security for your loved ones if you pass away these policies allow you to name a primary beneficiary and one or more contingent beneficiaries to receive a death benefit should you pass away term life insurance covers you for a set time period for example you may choose a 20 or 25 year term policy permanent life insurance covers you as long as your premiums are paid which can effectively translate to lifetime coverage permanent life insurance can also allow you to build cash value over time that you could borrow against if necessary types of permanent life insurance include with either type of life insurance i e term or permanent you can choose the death benefit amount you would like your beneficiaries to receive i e 500 000 1 million or even more between term life and permanent life insurance term life tends to offer lower premium costs since you re only covered for a set period of time premiums can depend on the age of the insured party and their gender because younger people are less likely to die than older people younger people typically pay lower life insurance costs and since women tend to live longer than men women tend to pay lower premiums engaging in risky behaviors such as a potentially dangerous hobby or using drugs and alcohol could cause life insurance premiums to be higher health is another important factor in determining life insurance costs people in good health typically pay lower life insurance premiums for example the risk of dying for a person with a 30 year policy is greater than the risk of dying for a person with a 10 year policy a history of chronic disease or other potential health issues with an individual or family such as heart disease or cancer may result in paying higher premiums obesity alcohol consumption or smoking can affect rates as well an applicant typically goes through a medical exam to determine whether he has high blood pressure or other signs of potential health issues that may result in premature death for the applicant and increased risk for the insurance company no exam life insurance policies allow you to skip the medical exam but you may pay higher premium costs homeowner s insurance is designed to protect against financial losses associated with covered incidents involving your home for example a typical homeowner s insurance policy covers both the home and its contents in the event of your policy can pay for repairs to your home or in extreme cases to rebuild the home homeowner s insurance can also pay to replace lost or damaged belongings as well as replacement or repairs for associated structures such as a garage or storage shed homeowner s insurance premiums can depend on the value of the home policy coverage amounts and where the home is located for example you may pay more to insure a home that s located in an area prone to hurricanes or tornadoes standard homeowner s insurance policies typically do not cover events like earthquakes or flood related damage you d need to purchase separate coverage to be protected against those scenarios | |
what is an insurance premium | an insurance premium is the amount of money an individual or business pays for an insurance policy insurance premiums are paid for policies that cover healthcare auto home and life insurance once earned the premium is income for the insurance company it also represents a liability as the insurer must provide coverage for claims being made against the policy failure to pay the premium on the individual or the business may result in the cancellation of the policy | |
when you sign up for an insurance policy your insurer will charge you a premium this is the amount you pay for the policy policyholders may choose from several options for paying their insurance premiums some insurers allow the policyholder to pay the insurance premium in installments monthly or semi annually while others may require an upfront payment in full before any coverage starts | the price of the premium depends on a variety of factors including there may be additional charges payable to the insurer on top of the premium including taxes or services fees auto insurancefor example in an auto insurance policy the likelihood of a claim being made against a teenage driver living in an urban area may be higher than a teenage driver in a suburban area in general the greater the risk associated the more expensive the insurance policy and thus the insurance premiums life insurancein the case of a life insurance policy the age at which you begin coverage will determine your premium amount along with other risk factors such as your current health the younger you are the lower your premiums will generally be conversely the older you get the more you pay in premiums to your insurance company high value policies will also carry a higher permium a few insurers may offer premium cash flow payment plans these plans allow the policyholder to pay the premium in small intervals some policyholders might also use premium financing to pay for expensive premiums but there is risk involved with this process | |
how premiums are calculated | insurance premiums may increase after the policy period ends the insurer may increase the premium for claims made during the previous period if the risk associated with offering a particular type of insurance increases or if the cost of providing coverage increases insurance companies generally employ actuaries to determine risk levels and premium prices for a given insurance policy the emergence of sophisticated algorithms and artificial intelligence is fundamentally changing how insurance is priced and sold there is an active debate between those who say algorithms will replace human actuaries in the future and those who contend the increasing use of algorithms will require greater participation of human actuaries and send the profession to a next level insurers use the premiums paid to them by their customers and policyholders to cover liabilities associated with the policies they underwrite they may also invest in the premium to generate higher returns this can offset some costs of providing insurance coverage and help an insurer keep its prices competitive while insurance companies may invest in assets with varying levels of liquidity and returns they are required to maintain a certain level of liquidity at all times state insurance regulators set the number of liquid assets necessary to ensure insurers can pay claims special considerationsmost consumers find shopping around to be the best way to find the cheapest insurance premiums you may choose to shop around on your own with individual insurance companies and if you are looking for quotes it s fairly easy to do this by yourself online for example the affordable care act aca allows uninsured consumers to shop around for health insurance policies on the marketplace upon logging in the site requires some basic information such as your name date of birth address and income along with the personal information of anyone else in your household you can choose from several options available based on your home state each with different premiums deductibles and copays the policy coverage changes based on the amount you pay providers will base premiums on the enrolee s state the individual s history and other factors the other option is to try going through an insurance agent or broker they tend to work with a number of different companies and can try to get you the best quote many brokers can connect you to life auto home and health insurance policies however it s important to remember that some of these brokers may be motivated by commissions | |
what do insurers do with the premiums | insurers use the premiums paid to them by their customers and policyholders to cover liabilities associated with the policies they underwrite some insurers invest in the premium to generate higher returns by doing so the companies can offset some costs of providing insurance coverage and help an insurer keep its prices competitive within the market | |
what are the key factors affecting insurance premiums | insurance premiums depend on a variety of factors including the type of coverage being purchased by the policyholder the age of the policyholder where the policyholder lives the claim history of the policyholder and moral hazard and adverse selection insurance premiums may increase after the policy period ends or if the risk associated with offering a particular type of insurance increases it may also change if the amount of coverage changes | |
what is an actuary | an actuary assesses and manages the risks of financial investments insurance policies and other potentially risky ventures actuaries assess particular situations financial risks primarily using probability economic theory and computer science most actuaries work at insurance companies where their risk management capabilities are particularly applicable in determining risk levels and premium prices for a given insurance policy | |
what is an insurance underwriter | insurance underwriters are professionals who evaluate and analyze the risks involved in insuring people and assets insurance underwriters establish pricing for accepted insurable risks the term underwriting means receiving remuneration for the willingness to pay a potential risk underwriters use specialized software and actuarial data to determine the likelihood and magnitude of a risk investopedia theresa chiechiinvestment banking underwritersthe underwriters of an investment bank often guarantee a specified amount of capital to a corporation during an initial public offering ipo an amount which is theoretically provided by investors as the source of capital the bank acts only as the facilitator of the transaction but they have still taken on an underwriting risk by promising to provide those proceeds of the sale to the client regardless of the success or failure of the sale of its company s shares insurance underwritersinsurance underwriters assume the risk involved in a contract with an individual or entity for example an underwriter may assume the risk of the cost of a fire in a home in return for a premium or a monthly payment evaluating an insurer s risk before the policy period and at the time of renewal is a vital function of an underwriter for example homeowners insurance underwriters must consider numerous variables when rating a homeowner s policy property and casualty insurance agents act as field underwriters initially inspecting homes or rental properties for conditions such as deteriorated roofs or foundations that pose a risk to the carrier the agents report hazards to the home underwriter the home underwriter additionally considers hazards that may trigger a liability claim hazards include unfenced swimming pools cracked sidewalks and the presence of dead or dying trees on the property these and other hazards represent risks to an insurance company which may eventually be required to pay liability claims in the event of accidental drownings or slip and fall injuries inputting a number of factors which often includes an applicant s credit rating homeowner insurance underwriters employ an algorithmic rating method to pricing the system generates an appropriate premium based on the platform s interpretation and the combination of all data reported from the observations of the field underwriter the lead underwriter also subjectively considers answers submitted by the applicant on the policy application when arriving at a premium insurance companies must balance their approach to underwriting if too aggressive greater than expected claims could compromise earnings if too conservative they will be outpriced by competitors and lose market share commercial banking underwriterscommercial banking underwriters assess the creditworthiness of borrowers to decide whether the individual or entity should receive a loan or funding the borrower is typically charged a fee to cover the lender s risk if the borrower defaults on the loan medical stop loss underwritersmedical stop loss underwriters assess risk based on the individual health conditions of self insured employer groups stop loss insurance protects groups that pay their own health insurance claims for employees rather than paying premiums to transfer all of the risk to an insurance carrier self insured entities pay medical and prescription drug claims plus administration fees out of company reserves and assume the risk posed by the potential for large or catastrophic losses such as organ transplants or cancer treatments underwriters for self insured entities must thus assess the individual medical profiles of employees underwriters also evaluate the risk of the group as a whole and calculate an appropriate premium level and aggregate claims limit which if exceeded may cause irreparable financial harm to the employer fast fact insurance underwriting is a large and profitable industry according to business insider warren buffett used insurance and reinsurance premiums to fund investments at berkshire hathaway 1 | |
what is insurtech | insurtech refers to the use of technology innovations designed to find cost savings and efficiency from the current insurance industry model insurtech is a combination of the words insurance and technology inspired by the term fintech understanding insurtechinsurtech is premised on the belief that the insurance industry is ripe for innovation and disruption insurtech is exploring avenues that large insurance firms have less incentive to exploit such as offering ultra customized policies social insurance and using new streams of data from internet enabled devices to dynamically price premiums according to observed behavior regarding traditional insurance some people pay more than they should be based on the basic level of data used to group people among other things insurtech is looking to tackle this data and analysis issue head on using inputs from all manners of devices including geolocation tracking of cars to the activity trackers on our wrists these companies are building more finely delineated groupings of risk allowing products to be priced more competitively in addition to better pricing models insurtech startups are testing the waters on a host of potential game changers these include using deep learning trained artificial intelligence ai to handle the tasks of brokers and find the right mix of policies to complete an individual s coverage there is also interest in the use of apps to pull disparate policies into one platform for management and monitoring creating on demand insurance for micro events like borrowing a friend s car and the adoption of the peer to peer model to both create customized group coverage and incentivize positive choices through group rebates there are many similarities to the goals and implementations of insurtech and fintech as both the insurance industry and financial industry are undergoing substantial process changes importance of insurtechinsurtech plays an important part in changing how coverage is applied and paid for in a number of different ways | |
what insurance areas does insurtech solve | the claims management process traditionally resulted in manually reviewing each claim deciding what compensation to award then remitting that compensation now insurtech companies aim to build processes that automate certain processes and detect fraud larger companies can leverage technology to gather and aggregate specific data points regarding specific claims these claims may also be validated using automation by comparing different data streams last large companies can use automation or repetitive workflows to pay out a large number of claims with minimal human intervention the underwriting process entails reviewing an individual s profile assessing their risk profile and extending them an insurance package offer that includes their coverage the information provided to a client also includes their monthly premium in addition to what compensation they may be entitled to under various claims much of this data can be mined or gathered automatically even if a client must submit information modern technology uses many data points to compare against historical data that can continually learn grow and make more educated assumptions this means the data decides for itself whether to extend a policy to the individual and what price is fair for the associated level of risk whether it s related to paying out a claim enforcing a different insurance level tier closing a customer s policy that has expired or approving a new customer there are a tremendous number of contracts that occur related to insurance | |
when leveraging blockchain technology smart contracts can be triggered to execute when specific criteria is met this eliminates the human element for needing to handle the contract and this allows an unbiased neutral party i e technology to evaluate the criteria of a contract and decide the appropriate course of action | as mentioned earlier big data can be used to gather analyze and summarize information this includes analyzing a customer s historical activity or assessing a broad range of claim types based on the information gathered insurers may be able to detect fraud protect against unsuitable risk or better understand where they may be most exposed according to grand view research the total insurtech industry value in 2022 was 5 4 billion the revenue forecast for 2030 is 152 billion 1innovations driving insurtech changethere continues to be a growing evolving range of technology used in insurtech that changes the way insurance is being performed here are the following most notable technologies being leveraged artificial intelligence functions allow certain tasks that previously required human interaction to now be performed exclusively reliant on technology for example customers would previously have to interact with representatives to have questions answered now interactive discussions with chatbots may allow a customer to receive help without talking to a human a subset of artificial intelligence is machine learning the ability to extract historical data and compile predictive models these models are then used to distribute information and may be set to a feedback loop if future data in fed into the model the model may learn and continually evaluate how to calculate appropriate premiums based on demographics or risk profiles insurtech change relies on efficiency this means that when insurance clients fill out a document online that record is automatically stored in a data warehouse or used to automatically compile a policy ready for signature automation tools are utilized to avoid manual human intervention when technological tools can carry out a process on its own big data refers to the collection of massive amounts of information this includes a broad range of data the fast collection of real time data and a variety of data sets big data collection techniques allow insurers to gather a broader set of data used to analyze the risk profile of a customer to better understand their characteristics and habits in addition this information can be gathered for millions of customers and fed into predictive models discussed earlier though most known for cryptocurrency the fundamental basis for blockchain technology is immutable distributed legers this allows for unalterable record keeping to ensure security and reliability in information storage it also allows for smart contract execution to reside on a blockchain remaining dormant until specific conditions are met to release insurance proceeds or validate an insurance client insurtech also relies on innovative hardware technologies as well drones can be used to assess properties evaluate property damage where it might have been physically unsafe for humans to traverse or audit a site for a claim drones are now becoming increasingly reliant on high definition photo and video quality allowing for assessors to heavily rely on photographs and stored images from flights another insurtech innovation that relies on physical innovation is the internet of things iot though a digital concept iot relies on the interaction between physical goods and software for example auto insurers now commonly offer devices that gauge vehicle speed handling and driving habits that can be used to reward positive driving habits or penalize negative driving habits while this level of information has never been available before insurance companies can now base premiums on the smallest of details according to hourly there are over 3 400 insurtech companies up from 1 500 companies in 2018 2insurtech companiesbelow are examples of real insurtech companies and the ways each are innovating the insurance industry lemonade directly sells insurance coverage via a custom mobile app this coverage is sold directly to the customer as opposed to being transmitted via brokers insurance policies include renters insurance homeowners insurance pet insurance and auto insurance all insurance claims processing is performed through the digital platform dacadoo leverages consumer devices such as phones and smartwatches to gather information via an integrated api this information crafts individual consumer profiles that allows dacadoo to assess risk in real time and adjust profiles based on positive or negative life improvements bdeo leverages artificial intelligence to improve the claim processing experience bdeo relies on chatbots to interact with customers to gather claim information the chatbot gives direction on what information is needed how to photograph the damage and where to input information then remote adjusters analyze the information provided the company also leverages a computer vision model that utilizes technology to minimize adjustor misevaluations etherisc leverages blockchain technology to utilize smart contracts etherisc gathers information from third party providers then as events unfold the company is able to have their contracts automatically perform tasks based on outcomes that are compared against this third party information for example agribusiness insurance claims may automatically process when specific natural conditions occur these natural conditions such as rainfall are compared with third party data to ensure no fraudulent activity may occur avinew is a pioneer in the insurtech industry regarding internet of thing technology the company offers lower premiums to customers who change their driving habits choose less risky routes or use an automatic driving system this information is all possible by onboard devices that track vehicle useage and tendencies criticism of insurtechalthough many of these innovations are long overdue there are reasons why the incumbent insurance companies are so reluctant to adapt insurance is a highly regulated industry with many layers of jurisdictional legal baggage to deal with as such the major companies have survived this long by being incredibly cautious which has made them shy away from working with any startups let alone startups in their own very stable industry this is a bigger problem than it sounds as many of the insurtech startups still require the help of traditional insurers to handle underwriting and manage catastrophic risk that said as more insurtech startups garner consumer interest with a refined model and a user friendly approach they may find that the incumbent players warm to the idea of insurtech and become interested in buying up some of the innovation there is also a certain level of privacy that is relinquished when adopting insurtech methodologies consider tracking devices that can detect whether you actually stop at stop signs these devices also track your location the places you visit and how long you are at those locations for some this level of data collection and personally identifiable information is less preferable than the benefit received from the efficient innovation of insurtech | |
what does insurtech mean | insurtech is a combination of insurance and technology it is an emerging industry that utilizes technology and modern innovations to change how traditional insurance is performed | |
is insurtech a component of fintech | insurtech and fintech are often considered two different industries both rely on modern solutions to change how traditional services are performed however there are many differences between the financial sector and insurance sector therefore insurtech companies are not likely to offer financial services in addition to insurance coverage | |
how does insurtech make money | insurtech relies on minimal overhead and operational efficient to make money though it still earns revenue from clients the goal is to have minimal costs by eliminating a physical office or personnel to perform tasks that have been eliminated through chatbots or automation due to lower costs insurtech companies are often able to offer lower prices | |
is insurtech better than traditional insurance | some customers may prefer face to face interactions with a dedicated insurance agent they ve gotten to know for years other customers may prefer to self select their own policy that can be canceled using an app insurtech simply offers a different method of delivering insurance coverage that traditional insurance may not have been able to offer whether one is better than the other is simply a matter of consumer preference the bottom linethe traditional insurance industry is being disrupted by the introduction of technology this new sector called insurtech offers customers a new way to do things by gathering information differently executing contracts more efficiently and analyzing information more accurately though some may feel the insurance industry will be losing a personal touch insurtech strives to offer lower more custom and more flexible coverage | |
what is an intangible asset | intangible assets differ from tangible assets which have physical forms such as buildings or office furniture for businesses an intangible asset includes patents goodwill and intellectual property investopedia jessica olahtypes of intangible assetsintangible assets are generally considered long term and their value can increase over time an intangible asset like a brand name can be critical to a company s long term success businesses can create or acquire intangible assets for example a company may create a mailing list of clients or establish a patent it can write off the expenses from the process such as filing the patent application hiring a lawyer and paying other related costs 1an indefinite intangible asset stays with the holder as long as it continues to operate such as a brand name a definite intangible asset is restricted to a limited timeframe such as a legal agreement to operate under another company s patent 2 types of intangible assets include any unauthorized use of intellectual property is called infringement this includes using mimicking or copying another entity s brand name logo or other intangible assets 3 | |
how to value intangible assets | a business like coca cola ko can contribute much of its success to brand recognition although brand recognition is not a physical asset that can be seen or touched it can have a meaningful impact on generating sales intangible assets have no recorded book value because of this when a company is purchased the purchase price is above the book value of assets on the balance sheet the purchasing company records the premium paid as an intangible asset on its balance sheet 4there are three common ways that businesses can value their intangible assets according to the american institute of certified public accountants aicpa 5intangible vs tangible assetstangible assets can be current or fixed current assets can be easily used and converted to cash such as inventory fixed assets are tangible assets with a lifespan of one year or more plant property and equipment pp e are considered fixed common tangible assets include property equipment furniture inventory and vehicles financial securities such as stocks and bonds are also considered tangible assets because they derive value from contractual claims 6unlike intangible assets the value of tangible assets is easier to determine the owner may choose to hire an appraiser who determines the fair market value fmv of the asset or they may decide to sell the asset for cash another common form of valuation is comparing it to the cost of a replacement | |
why is it difficult to value intangible assets | it is often difficult to determine an intangible asset s future benefits and lifespan or the costs associated with maintaining it the useful life of an intangible asset can be either identifiable or non identifiable most intangible assets are considered long term assets with a useful life of more than one year 2 | |
what is brand equity | brand equity is an intangible asset and refers to a value premium that a company generates from a recognized product instead of its generic equivalent companies create brand equity for their products through mass marketing campaigns | |
how are intangible assets disclosed on a company s balance sheet | internally developed intangible assets do not appear on a company s balance sheet when intangible assets have an identifiable value and lifespan they appear on a company s balance sheet as long term assets valued according to their price and amortization schedules the bottom linebusinesses can have both tangible and intangible assets even though intangible assets can t be seen and held they provide value for companies as brand names logos or mailing lists intangible assets can be difficult to value | |
what is intangible personal property | the term intangible personal property refers to an item of value that cannot be touched or physically held these assets can be held by both individuals and corporations intangible personal property can be anything that has image social and reputational capital along with digital copyrights patents and investments intangible personal property or intangible assets are the opposite of tangible personal property which can be physically touched and come with a degree of value such as machinery jewelry and electronics understanding intangible personal propertypersonal property can be divided into a few different categories notably tangible and intangible personal property tangible personal property is anything that can be held and has definitive value while intangible personal property is anything that doesn t have any obvious value and can t be touched we discuss the differences between the two a little further down the value in intangible personal property lies in the associated benefits and value recognition intellectual property is one of the most common forms of this type of property other types of intangible personal property include life insurance contracts securities investments royalty agreements and partnership interests the most common forms of intangible property for companies include goodwill research and development r d and patents some forms of these intangible items are known as capital assets and appear on a company s financial statements while others are not included for example a company would list a trademark or patent as an asset on its balance sheet the company may need to do in depth research to determine a realistic market price for intangible objects once a value is assigned to this property the company may write off some of the cost of creating the object an example may be the cost associated with compiling a customer or client mailing list or hiring a lawyer to file a patent application intangible personal property may often be referred to as incorporeal property special considerationsthe internal revenue service irs does impose capital gains taxes on any tangible property that individuals and corporations sell but it can be cloudy when it comes to intangible assets since there is no actual physical shape to this type of property it doesn t have an assigned or hard value which makes it hard to account for and evaluate as such not all forms of intangible personal property are taxable some types of intangible assets are though making them eligible for capital gains or losses capital gains are realized when they re sold at a higher price while capital losses result from a lower price than the original purchase price the value is determined by any intellectual or non physical attributes for instance a musical composition may be taxed when it is sold to someone else at a different price than when it was originally purchased while tangible assets may be depreciated the irs requires that property owners amortize over 15 years the capitalized costs any intangibles that were purchased before august 1993 that s because they are commonly given a 15 year life these refer to any assets held for the purpose of trade or business 1certain intangible assets may be taxed as ordinary income though thanks to the tax cuts and jobs act of 2017 this may include things like intellectual property digital assets or patents 2 make sure you consult a tax professional about how to handle your intangibles intangible personal property vs tangible personal propertyas noted above intangible personal property is anything without obvious value that can t be physically manipulated tangible personal property on the other hand is anything that can be held and anything with discernable value as such it can be moved around tangible assets can be used in the day to day operations of a business or by individuals in their daily lives examples include machinery vehicles jewelry art electronics and furniture things like smartphones and collectibles also fall in this category this kind of personal property is subject to depreciation either on an accelerated basis or using the five or seven year periods taxation occurs on an ad valorem basis which requires the use of an appraiser to assess the value 3 it can also be taxed on the actual value the difference between the sale and the purchase price real estate is not considered personal property because it cannot be moved which is a determining factor in identifying personal property 4examples of intangible personal propertylet s say firm xyz invented a liquid that when rubbed on a tattoo causes it to blend into the surrounding skin rendering it invisible there is also a solvent used to remove the tattoo obstructing solution firm xyz issues a patent for both formulas the patent which keeps others from copying the formulas gives the company sole ownership rights over this invention for the duration of the patent the firm enjoys the financial benefits of being the sole seller of this breakthrough tattoo obstructing concoction those financial benefits can be represented by the patent which does not have any inherent value itself but is valuable because of these future benefits the company will include the patents as a capital asset and may write off some of the expenses required to list the patent | |
what types of assets are considered intangible personal property | intangible personal property is anything with no obvious and assigned value and can t be physically held examples include copyrights patents intellectual property investments digital assets along with anything that has image social or reputational capital | |
what s the difference between intangible and tangible personal property | intangible personal property is any type of asset that has value but isn t physical in nature examples of intangible personal property are copyrights patents intellectual property and investments assets that can be represented with social or reputational capital also qualify as intangible personal property tangible personal property on the other hand refers to assets that can be touched and have an assigned value such as jewelry art machinery and electronics | |
is intangible property taxable | intangible personal property has no physical shape and as such has no assigned value this makes it hard to account for and properly evaluate them but there are certain forms of intangible personal property that are subject to capital gains taxes this happens when they are sold at a higher price than when they were purchased an asset s value and therefore any capital gains that result from its sale are based on its physical attributes and intellectual content things like music compositions are assets that have great value and may result in capital gains when if they are sold some assets may be taxed as ordinary income such as patents or other forms of intellectual property | |
what is intellectual capital | intellectual capital is the value of a company s employee knowledge skills business training or any proprietary information that may provide the company with a competitive advantage intellectual capital is considered an asset and can broadly be defined as the collection of all informational resources a company has at its disposal that can be used to drive profits gain new customers create new products or otherwise improve the business it is the sum of employee expertise organizational processes and other intangibles that contribute to a company s bottom line some of the subsets of intellectual capital include human capital information capital brand awareness and instructional capital understanding intellectual capitalintellectual capital is a business asset although measuring it is a very subjective task as an asset it is not booked on the balance sheet as intellectual capital instead to the extent possible it is integrated into intellectual property as part of intangibles and goodwill on the balance sheet which in itself is difficult to measure companies spend much time and resources developing management expertise and training their employees in business specific areas to add to the mental capacity so to speak of their enterprise this capital employed to enhance intellectual capital provides a return to the company though difficult to quantify but something that can contribute toward many years worth of business value measuring intellectual capitalvarious methods exist to measure intellectual capital but there is no consistency or uniform standard accepted in the industry for example the balanced scorecard which is an industry performance metric measures four perspectives of an employee as part of its efforts to quantify intellectual capital the perspectives are financial customer internal processes and organization capacity on the other hand the danish company skandia considers the transformation of human capital into structural capital as the mission of intellectual capital the company has designed a house like structure with financial focus as the roof customer focus and process as the walls human focus as the soul and renewable and development focus as the platform to measure intellectual capital 1 because of the nebulous nature and defining features of intellectual capital it is also referred to as intangible assets and environment types of intellectual capitalintellectual capital is most commonly broken down into three categories human capital relationship capital and structural capital human capital includes all of the knowledge and experience of employees within an organization it consists of their education life experiences and work experience it can be increased by providing training relationship capital encompasses all of the relationships that an organization has which include its employees its suppliers its customers its shareholders and so on structural capital refers to the core belief system of an organization such as its mission statement company policies work culture and its organizational structure examples of intellectual capitalexamples of intellectual capital include the knowledge that a factory line worker has developed over many years a specific way of marketing a product a method to cut downtime on a critical research project or a mysterious secret formula e g coca cola soft drink a company can also bolster its intellectual capital by hiring qualified individuals and process experts who contribute to its bottom line for example a mechanic graduates from technical school and starts work at an automobile manufacturer their intellectual capital consists of the knowledge they learned at school after one year on the job their intellectual capital has increased by the experience they have gained through their job and the specific application of their knowledge after two years the mechanic is enrolled in a training program that focuses on new technology and increased efficiency the mechanic s and therefore the company s intellectual capital has increased further as technology and process improvements become more of a differentiating factor within modern companies intellectual capital becomes a greater factor in achieving success in a competitive marketplace | |
what is an intentionally defective grantor trust | an intentionally defective grantor idgt trust is an estate planning tool used to freeze certain assets of an individual for estate tax purposes but not for income tax purposes the intentionally defective trust is created as a grantor trust with a loophole that allows the them to receive income from certain trust assets the grantor pays income tax on any generated income but the estate does not incur any estate taxes when the grantor dies understanding intentionally defective grantor trustsgrantor trust rules outline certain conditions when an irrevocable trust can receive some of the same treatments as a revocable trust by the internal revenue service irs these situations sometimes lead to the creation of what are known as intentionally defective grantor trusts in these cases a grantor is responsible for paying taxes on the trust s income but trust assets are not counted toward the owner s estate however such assets would apply to a grantor s estate if the individual runs a revocable trust because the individual would effectively still own the property for estate tax purposes the value of the grantor s estate is reduced by the amount of the asset transfer the individual will sell assets to the trust in exchange for a promissory note also called an installment note of some length such as 10 or 15 years the note will pay enough interest to classify the trust as above market but the underlying assets are expected to appreciate at a faster rate the beneficiaries of idgts are typically children or grandchildren who will receive assets that have been able to grow without reductions for income taxes which the grantor has paid he idgt can be an effective estate planning tool if appropriately structured allowing a person to lower their taxable estate while gifting assets to beneficiaries at a locked in value the trust s grantor can also reduce their taxable estate by paying income taxes on the trust assets essentially gifting extra wealth to beneficiaries due to the complexity an idgt should be structured with the assistance of a qualified accountant certified financial planner cfp or an estate planning attorney selling assets to an intentionally defective grantor trustthe structure of an idgt allows the grantor to transfer assets to the trust either by gift or sale gifting an asset to an idgt could trigger a gift tax so the better alternative would be to sell the asset to the trust when assets are sold to an idgt there is no recognition of a capital gain which means no taxes are owed this is ideal for removing highly appreciated assets from the estate in most cases the transaction is structured as a sale to the trust to be paid for in the form of an installment note payable over several years the grantor receiving the loan payments can charge a low rate of interest which is not recognized as taxable interest income however the grantor is liable for any income the idgt earns if the asset sold to the trust is income producing such as a rental property or a business the income generated inside the trust is taxable to the grantor frequently asked questions | |
what makes a grantor trust intentionally defective | intentionally defective refers to the fact that the grantor no longer owns the assets in the trust they are removed from the estate but still pays income taxes on any income earned from the assets in the trust | |
how are intentionally defective grantor trusts taxed | idgts are not taxed when assets are sold into them or if they appreciate because there is no recognition of capital gains however the grantor pays income taxes if there is income from the idgt | |
what happens to an intentionally defective grantor trust when the grantor dies | if there was an installment note the principal and any accumulated interest are included in the grantor s taxable estate however if the assets were sold into the idgt they are not included in the taxable estate and can be passed on to the beneficiaries | |
what is the inter american development bank idb | the inter american development bank idb is a cooperative development bank founded in 1959 to accelerate the economic and social development of its latin american and caribbean member countries it is owned by a total of 48 member countries including the u s and some european nations 1 the bank provides financing in the form of loans and grants 2understanding the inter american development bank idb the idb assists latin american and caribbean countries in formulating development policies and provides financing and technical assistance to achieve environmentally sustainable economic growth increase competitiveness enhance social equity fight poverty modernize the state and foster free trade and regional integration 3 the ibd supported 94 projects lending 13 6 billion in 2021 4the funds that the inter american development bank lends to its member countries are raised in the bond market the bonds are backed by the loans the idb makes which carry the guarantee of capital pledged by the bank s non borrowing members 5 the bonds are triple a rated and issued at market rates the triple a rating helps to keep borrowing costs for the member countries low 6 the u s is the idb s largest shareholder with a 30 01 stake brazil and argentina each own 11 35 mexico comes in third with a 7 3 stake and japan owns 5 7special considerationsas of october 2022 the inter american development bank has 601 projects financing 56 1 billion 8 past projects that have been completed in 2022 include projects to reform and modernize the state suriname guyana jamaica and barbados social investment ecuador energy mexico and the environment columbia barbados 9 the bank s current goals include focusing on social inclusion economic integration and innovation as well it s interested in climate change gender issues and diversity 3 | |
when he was president of the iab luis alberto moreno said the focus of the bank included tackling inequality and improving public services for the countries it serves change is needed said moreno pointing to the various protests in the streets within the region during 2019 moreno pointed out the lack of growth in latin america since 2014 the end of the commodity boom since then the region has experienced the worst economic growth in the world 10 | in september 2020 mauricio j claver carone was elected president of the inter american development bank idb during an electronic meeting of the bank s board of governors claver carone took office on october 1 2020 for a five year term previously claver carone was deputy assistant to the former u s president donald trump and senior director for western hemisphere affairs at the u s national security council he has also served as senior advisor to the under secretary for international affairs at the u s department of the treasury 11 | |
what is interactive media | interactive media is a method of communication in which a program s outputs depend on the user s inputs in turn the user s inputs affect the program s outputs it refers to the ways in which people process and share information or how they communicate with each other interactive media allows people to connect with others or organizations by making them active participants in the media they consume through text graphics video and sound understanding interactive mediathe purpose of interactive media is to engage the user and interact with them in a way non interactive media does not traditional forms of media such as television and radio originally required no active participation these forms of media made consumers more passive providing them with no way to navigate through their experiences except for the ability to change the channel that began to change with the advent of the internet in the 1990s as technology developed consumers were given different tools through which interactive media was presented access to the internet went from an expensive utility available only through dial up to a wireless tool accessible with the touch of a finger computers and laptops became household items and a necessity in the workplace smartphones made interacting with media easy and convenient interactive media will become even more immersive as technology becomes more advanced broadening what people can do elements of interactive mediaunlike traditional media interactive media is meant to enhance a user s experience an interactive medium will require one more of the following elements to do that a user can participate by manipulating one or more of these elements during their experience something traditional media doesn t offer 1six degrees is often considered to be the world s first social media platform it was founded in 1996 the influences of interactive mediainteractive media doesn t just make people more active it also gives them the power to communicate with people companies and organizations with whom they would normally have no contact it allows the free flow and exchange of ideas and information 2interactive media also has an educational component making it a powerful learning tool it allows and encourages students to become more active in their learning experiences and more collaborative and to be more in control of what they re learning interactive media has changed the way people traditionally approach various personal and professional aspects of life such as searching for a job interviews going to school and advertising examples of interactive mediapeople are surrounded by interactive media in the digital era you ll find an example of this form of communication everywhere you look | |
what is the primary advantage of using interactive media | interactive media allows the user and a business to interact and communicate much more seamlessly as a consumer you can communicate with the business and get your questions answered as a business owner you can more easily identify and address your clients or customers needs and concerns | |
what are some common examples of interactive media | you most likely engage in interactive media repeatedly all day you ve done so when you check in to your instagram x or facebook account or when you tap into your uber phone app to arrange for a ride home maybe you take care of some personal finance issues on your smartphone as well all these are examples of interactive media |
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