The IRS Code allows for certain penalty-free withdrawals, and gives the plan administrator the freedom to define certain other hardship exemptions. Certain kinds of retirement plan withdrawals are excluded from the 10% early withdrawal penalty tax. These include medical expenses which exceed 7.5% or 10% of Adjusted Gross Income, distributions to the family members of active duty military personnel who have been called to active duty, and distributions needed if the participant becomes disabled. Continue reading...
Income inequality is the difference in the average income of the lower/middle class and the upper class. Naturally the high income of very rich people in the country, which constitute a very small percentage of the population, will dwarf the average income of those who are not very rich. The worrisome thing is when the gap between them widens at an accelerating rate and the lower classes are not able to break through to the upper classes. Continue reading...
IRS Link to Form — Found Here The Form 6251 is used to calculate the alternative minimum tax (AMT) for individuals who may have high income but relatively low taxes due after deductions. The individual first computes his or her adjusted gross income, which does not allow for some deductions that may have been taken for the tax filing. If the AMT is higher than the taxes already paid, the individual will have to pay the difference. Continue reading...
Enterprise Value is the total cost to acquire a company. The Enterprise Value of a company is the amount that would have to be paid for full ownership of it, which would include market capitalization (price per share x shares outstanding) + net debt (all liabilities - cash and equivalents). Market cap alone is technically just shareholders equity, and not capital from debt, so Enterprise Value adds that in for consideration. Enterprise value is the numerator in EV/E (Enterprise Value over EBITDA), a very common valuation ratio. Continue reading...
The Federal Government will give college students who have filled out a FAFSA and are found to be in dire financial need a grant of up to $4,000 a year. The grant does not have to be repaid. The Federal Supplemental Education Opportunity Grant provides funding for educational expenses to students with expected family contributions (EFCs). The maximum annual amount that can be received in a SEOG is $4,000 per student. Continue reading...
The Federal Housing Act of 1934 sought to make it easier for Americans to buy homes. It was believed and still is today to an extent that homeownership is a positive foundation for a healthy economy because it provides stability to communities, facilitating healthy family life, community involvement, and the development of businesses in an area where a community will support the business. The Federal Housing Administration runs the FHA loan program with the help of certified lending institutions. FHA loans are a way for lower income earners to be able to purchase a home. Continue reading...
Price to Tangible Book Value serves as a conservative estimation of the value inherent in a share, without Goodwill and other intangibles (opposite of tangibles) factored in. Price to Tangible Book Value (PTBV) is a ratio of the share price over the Tangible Book Value of a company and helps investors see what inherent value is present on a company's books. The Tangible Value does not include goodwill, patents, and other intangible values. Continue reading...
An investment bank is a financial institution that typically specializes in large, complex transactions, such as underwriting an Initial Public Offering (IPO), mergers and acquisitions, direct investment into start-up firms, or advising large institutional clients on investments/transactions. In short, investment banks help create the bridge between large enterprises and the investor. In that sense, IPOs are one way to accomplish this, but they also help businesses secure financing in other ways, such as through bond issues or derivative products. Continue reading...
If an option on an underlying security does not have a strike price giving the option holder the ability to exercise the option for a profit (based on the current market price of the underlying security) that option is “Out of The Money.” An option is Out Of The Money (OTM) if it isn’t profitable for the option holder to exercise it. Options have a strike price that contractually defines the amount which will be paid for the underlying security if the option is exercised. Continue reading...
A time spread using call options is a strategy that buys and sells the same number of options with the same strike prices, but different expirations. Time spreads are sometimes called calendar spreads or horizontal spreads. They make money based on the time decay of the options being shorted. Two calls are used: one is shorted and one is purchased, and both have the same strike price and same underlying security. Continue reading...