Month: June 2020

In finance, the term jitney refers to a broker that does not have direct access to an exchange and therefore relies on another broker with exchange access in order to execute their trades.

Tapering is the gradual reversal of a quantitative easing policy implemented by a central bank to stimulate economic growth. As is the case with most, if not all, economic stimulus programs, they are meant to be unwound once officials are confident that the desired outcome, usually self sustaining economic growth, has been achieved.

Covered interest rate parity refers to a theoretical condition in which the relationship between interest rates and the spot and forward currency values of two countries are in equilibrium. The covered interest rate parity situation means there is no opportunity for arbitrage using forward contracts, which often exists between countries with different interest rates.

An LLC operating agreement is a document that customizes the terms of a limited liability company according to the specific needs of its owners. It also outlines the financial and functional decision-making in a structured manner. It is similar to articles of incorporation that govern the operations of a corporation.

Tax-loss harvesting is the selling of securities at a loss to offset a capital gains tax liability. This strategy is typically employed to limit the recognition of short-term capital gains. Short-term capital gains are generally taxed at a higher federal income tax rate than long-term capital gains.1 However, the method may also offset long-term capital gains.

Capital employed, also known as funds employed, is the total amount of capital used for the acquisition of profits by a firm or project. Capital employed can also refer to as the value of all the assets used by a company to generate earnings.

Publication 525, Taxable and Nontaxable Income, is a document published by the Internal Revenue Service (IRS) detailing what types of income taxpayers should consider taxable or nontaxable when filing tax returns.1

A 12b-1 fund is type of mutual fund that charges its holders a 12b-1 fee. A 12b-1 fee is a fee used to pay for a mutual fund’s distribution costs. It is often used as a commission to brokers for selling the fund. 12B-1 funds take a portion of investment assets held and use them to pay expense fees and distribution costs. These costs are included in the fund’s expense ratio and are described in the prospectus. 12b-1 fees are sometimes called a “level load.”

90-Day Letter is an IRS notice stating that there was a discrepancy or error within an individual’s taxes and they will be assessed unless petitioned. The taxpayer has 90 days to respond, otherwise the audit deficiencies will result in reassessment. Also known as a Notice of Deficiency.

Guaranteed investment income is a type of investment product offered by insurance companies that allow clients to invest in equity, bond, and/or index fund while providing a promise of a predefined minimum value of the fund (usually, the initial investment amount) will be available at the fund’s maturity or when the client dies.