Certainty Equivalent
The Concept of the Certainty Equivalent The concept of the certainty equivalent is closely related to the concept of risk premium, which is the additional return an investor must receive for taking a risky investment. In other words, the higher the risk, the higher the premium should be. As a result, the higher the certainty equivalent, the better. But how...
Decreasing Term Insurance
What is decreasing term insurance and how does it work When most people think of life insurance, they think of whole life or term life insurance. However, there is another type of policy known as decreasing term insurance. As the name suggests, this type of policy has decreasing benefits over time. The premium remains the same, but the death benefit...
How to Celebrate a Successful Business Sale
Celebrating a successful business sale motivates your staff and lets them know how important they are to the business's success. However, there are countless ways to commemorate this business milestone, some practical and others not so much. Below are some practical ideas on how to celebrate a successful business sale. 1. Go Golfing The golf course is one of the best places...
4 Ways to Boost Your Small Business Working Capital
Small businesses are the backbone of the American economy, but they often have trouble accessing the capital they need to grow and thrive. Working capital is the money you have available to invest in your business, pay your employees, and keep your doors open. If you're struggling to keep up with your working capital needs, here are four smart...
UPREIT
UPREIT - Upfront Investment in Real Estate UPREIT stands for "up-front investment in real estate" and gives an investor a stake in a real estate portfolio, instead of just a single property. An UPREIT is an excellent way to diversify an investor's portfolio and eliminate dependence on one property. While real estate isn't a liquid asset, REIT shares can be...
Personal Service Corporation
What is a personal service corporation? A personal service corporation is a type of corporation that provides services to individuals. Its services can vary, but in general they cover a wide range of fields. These services are specifically outlined by the Internal Revenue Service (IRS) for tax purposes. Ownership A personal service corporation is a business entity that is taxed as a...
Facultative Reinsurance
What is facultative reinsurance and what are its benefits Facultative reinsurance is a type of insurance coverage that is purchased by an insurer on a case-by-case basis. This allows the insurer to tailor the coverage to fit the specific risks of each policyholder. Facultative reinsurance can be used to protect against a variety of risks, including natural disasters, product liability,...
Autoregressive
Important Things You Should Know About Autoregressive Models Autoregressive models are models that use random processes to describe time-varying phenomena. In the context of economics and nature, they are often used to explain financial markets and the price movements that accompany them. There is a great deal of controversy surrounding this model and its predictive ability, but it remains an...
Audit Risk
What is Audit Risk Audit risk is the risk that an auditor will express an inappropriate opinion on a company's financial statements. Audit risk is comprised of two components: inherent risk and control risk. Inherent risk is the susceptibility of an assertion to error, assuming that there are no related internal controls. Control risk is the likelihood that a material...
What is Triangular Arbitrage?
Triangular Arbitrage is a form of arbitrage that exploits pricing discrepancies resulting from the trading of three different currencies in the foreign exchange market. In order to be successful, one must first know the factors that make triangular arbitrage profitable. These factors include market inefficiency, time lag between transaction processing, costs, and profitability. In this article, we'll go over...