A testamentary trust is a trust that is established in accordance with the instructions contained in a last will and testament. A will could have more than one testamentary trust. The trustee named is responsible for managing and distributing the trustor’s assets to the beneficiaries as directed in the will.
Hedge accounting is a method of accounting where entries to adjust the fair value of a security and its opposing hedge are treated as one. Hedge accounting attempts to reduce the volatility created by the repeated adjustment to a financial instrument’s value, known as fair value accounting or mark to market. This reduced volatility is done by combining the instrument and the hedge as one entry, which offsets the opposing’s movements.
A trading book is the portfolio of financial instruments held by a brokerage or bank. Financial instruments in a trading book are purchased or sold for several reasons. For example, they might be bought or sold to facilitate trading actions for customers or to profit from trading spreads between the bid and ask prices, or to hedge against different forms of risk. Trading books can range in size from hundreds of thousands of dollars to tens of billions depending on the size of the institution.
A qualified retirement plan meets the requirements of Internal Revenue Code Section 401(a) of the Internal Revenue Service (IRS) and is therefore eligible to receive certain tax benefits, unlike a non-qualified plan. An employer establishes such a retirement plan on behalf of and for the benefit of the company’s employees. It is one tool that can help employers attract and retain good employees.
Open cover is a type of marine insurance policy in which the insurer agrees to provide coverage for all cargo shipped during the policy period. Open cover insurance is most commonly purchased by companies that make frequent shipments, as the blanket coverage keeps them from having to purchase a new policy each time a shipment is made.
A holder of record is the name of the person who is the registered owner of a security and who has the rights, benefits and responsibilities of ownership. The holder of record for a stock typically has shareholder voting rights and receives dividend payouts, if there are any. The holder of record for a bond owns the bond and receives the principal and interest payments. When the owner sells the security, he or she ceases to be the holder of record.
The Series 66 is an exam and license that is meant to qualify individuals as investment advisor representatives or securities agents. The Series 66, also known as the Uniform Combined State Law Examination, covers topics relevant to providing investment advice and effecting securities transactions for clients.
Fractional reserve banking is a system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal. This is done to theoretically expand the economy by freeing capital for lending.
Form 1099-Q: Payments From Qualified Education Programs is an Internal Revenue Service (IRS) tax form sent to individuals who receive distributions from a Coverdell education savings account (ESA) or a 529 plan. These distributions, including rollovers, may be taxable, and you must determine the tax liability of any distribution using other IRS information. The form is then used by taxpayers to fill out both federal and state tax returns if the distributions received are subject to tax.
Fractional reserve banking is a system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal. This is done to theoretically expand the economy by freeing capital for lending.