Month: May 2020

The term underbanked refers to individuals or families who manage their finances through cash transactions instead of more traditional financial services such as bank accounts, credit cards, and loans. This may be because they lack access to convenient, affordable banking services or because they prefer to use alternatives to traditional financial services.

A naked option, also known as an uncovered option, is created when the seller of an option contract does not own the underlying security needed to meet the potential obligation that results from selling (also known as writing or shorting) an option. Selling an option creates an the obligation of the seller to provide the option buyer with the underlying shares or futures contract for a corresponding long position (for a call option) or the cash necessary for a corresponding short position (for a put option) at expiration. If the seller has no ownership of the underlying asset or the corresponding cash necessary for execution of a put option, then the seller will need to acquire it at expiration based on current market prices. With no protection from the price volatility, such positions are considered highly vulnerable to loss and thus referred to as uncovered, or more colloquially, as naked. read more

The term underbanked refers to individuals or families who manage their finances through cash transactions instead of more traditional financial services such as bank accounts, credit cards, and loans. This may be because they lack access to convenient, affordable banking services or because they prefer to use alternatives to traditional financial services.

The Basel Accords are three series of banking regulations (Basel I, II, and III) set by the Basel Committee on Bank Supervision (BCBS). The committee provides recommendations on banking regulations, specifically, concerning capital risk, market risk, and operational risk. The accords ensure that financial institutions have enough capital on account to absorb unexpected losses.

The free market is an economic system based on supply and demand with little or no government control. It is a summary description of all voluntary exchanges that take place in a given economic environment. Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions. Based on its political and legal rules, a country’s free market economy may range between very large or entirely black market.

A jumbo loan, also known as a jumbo mortgage, is a type of financing that exceeds the limits set by the Federal Housing Finance Agency (FHFA). Unlike conventional mortgages, a jumbo loan is not eligible to be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac. Designed to finance luxury properties and homes in highly competitive local real estate markets, jumbo mortgages come with unique underwriting requirements and tax implications. These kinds of mortgages have gained traction as the housing market continues to recover following the Great Recession. read more

The days sales of inventory (DSI) is a financial ratio that indicates the average time in days that a company takes to turn its inventory, including goods that are a work in progress, into sales.

Form 1040-X is issued by the Internal Revenue Service (IRS) to taxpayers who need to amend their tax returns for any reason. A 1040-X form is necessary for an amended tax return that will change tax calculations, such as changes to filing status, number of dependents, or corrections to income credits or deductions. However, it’s important to avoid using Form 1040-X for mathematical errors in your tax return, as the IRS will correct any in your return.

Barriers to entry are the economic term describing the existence of high start-up costs or other obstacles that prevent new competitors from easily entering an industry or area of business. Barriers to entry benefit existing firms because they protect their revenues and profits.