| Intelligent ETF |
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An exchange-traded fund (ETF) that employs an active investment strategy based on a broad index, such as the S&P 500 or a sector-based index. The fund may choose to exclude some stocks within the index while increasing or decreasing the percentage weighting of other stocks. Most intelligent ETFs carry higher expense ratios than standard ETFs, as well as substantially higher turnover ratios.
Also known as a "smart ETF". |
| Currency Basket |
| A selected group of currencies in which the weighted average is used as a measure of the value or the amount of an obligation. A currency basket functions as a benchmark for regional currency movements - its composition and weighting depends on its purpose. |
| Gift Splitting |
| A taxation rule that allows a married couple to split a gift's total value as if each contributed half of the amount. Gift splitting allows a couple to increase their total gift tax exemption amount by combining individual allowances. |
| Umbrella Insurance Policy |
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Extra liability insurance coverage that goes beyond the limits of the insured's home, auto or watercraft insurance. It provides an additional layer of security to those who are at risk for being sued for damages to other people's property or injuries caused to others in an accident. It also protects against libel, vandalism, slander and invasion of privacy.
An umbrella insurance policy is very helpful when the insurance owner is sued and the dollar limit of the original policy has been exhausted. The added coverage provided by liability insurance is most useful to individuals who own a lot of assets or very expensive assets and are at significant risk for being used. |
| Adjusted Closing Price |
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A stock's closing price on any given day of trading that has been amended to include any distributions and corporate actions that occurred at any time prior to the next day's open.
The adjusted closing price is often used when examining historical returns or performing a detailed analysis on historical returns. |
| Punitive Damages |
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Legal recompense that is levied as punishment for a wrong or offense committed by the payor. Punitive damages are awarded by a court of law in a lawsuit. They are often required in order to make up for a perceived shortfall in compensatory damages and are merely intended to indemnify the plaintiff.
Punitive damages are generally taxable to the recipient, while compensatory damages are not. Punitive damages are among the most difficult type of financial redress to acquire in court, as they generally require proof of substantial and intentional injuries on the part of the defendant. |
| Treble Damages |
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A law that permits a court to triple the amount of damages awarded in cases where the defendant willfully acted in a prohibited way. Usually a court will require substantial evidence proving that the defendant's actions were willful in nature or done in bad faith before treble damages are awarded.
In the corporate world treble damages often arise in regard to patent infringement, willful counterfeiting and antitrust lawsuits. Damages are calculated against the financial loss incurred by the plaintiff directly resulting from the actions of the defendant. |
| Price Rigging |
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An illegal action performed by a group of conspiring businesses that occurs when the firms agree to artificially inflate prices in an attempt to recognize higher profits at the expense of the consumer. Price rigging can be found in any industry and is regulated by the antitrust division of the United States Department of Justice. Also known as "price fixing" or "collusion".
For example, let's assume that the local gas stations agree to artificially inflate the price of gasoline by setting it several cents above where the price would be found under normal competition. This would be deemed price rigging, which is unlawful and can lead to severe criminal charges. |
| Price Fixing |
| Establishing the price of a product or service, rather than allowing it to be determined naturally through free market forces. This procedure is often an illegal practice. Unfortunately, different retailers have been accused of this for a long time. |
| Price Discrimination |
| A pricing strategy that charges customers different prices for the same product or service. In pure price discrimination, the seller will charge each customer the maximum price that he or she is willing to pay. In more common forms of price discrimination, the seller places customers in groups based on certain attributes and charges each group a different price. Price discrimination allows a company to earn higher profits than standard pricing because it allows firms to capture every last dollar of revenue available from each of its customers. |
| Value Added Reseller (VAR) |
| Third-party vendor that enhances or modifies existing hardware or software, adding value to the services provided by the processor or acquirer. |
| Reverse Stock Split |
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A reduction in the number of a corporation's shares outstanding that increases the par value
of its stock or its earnings per share. The market value of the total number of shares (market
capitalization) remains the same.
For example, a 1-for-2 reverse split means you get half as many shares, but at twice the price. It's usually a bad sign if a company is forced to reverse split - firms do it to make their stock look more valuable when, in fact, nothing has changed. A company may also do a reverse split to avoid being delisted. |
| Universal Life Insurance |
| A type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element (like whole life insurance) which is invested to provide a cash value buildup. The death benefit, savings element and premiums can be reviewed and altered as a policyholder's circumstances change. In addition, unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums. |
| Equity-Indexed Universal Life Insurance |
| A permanent life insurance policy that allows policyholders to tie accumulation values to a stock market index. Indexed universal life insurance policies typically contain a minimum guaranteed fixed interest rate component along with the indexed account option. Indexed policies give policyholders the security of fixed universal life insurance with the growth potential of a variable policy linked to indexed returns. |
| Variable Universal Life Insurance - VUL |
| A form of cash-value life insurance that offers both a death benefit and an investment feature. The premium amount for variable universal life insurance (VUL) is flexible and may be changed by the consumer as needed, though these changes can result in a change in the coverage amount. The investment feature usually includes "sub-accounts," which function very similar to mutual funds and can provide exposure to stocks and bonds. This exposure offers the possibility of an increased rate of return over a normal universal life or permanent insurance policy. |
| Private Mortgage Insurance - PMI |
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A policy provided by private mortgage insurers to protect lenders against loss if a borrower defaults. Most lenders require PMI for loans with loan-to-value (LTV) percentages in excess of 80%. This allows the borrower to make a smaller down payment of as low as 3%, instead of about 20%, and usually requires an initial premium payment and possibly an additional monthly fee depending on the loan's structure.
Some of the well-known mortgage-financing companies offering private mortgage insurance products in India are as follows -
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| An insurance policy designed specifically to repay mortgage debt in the event of the death of the borrower. These policies differ from traditional life insurance policies in that, for a traditional policy, the death benefit is paid out when the borrower dies; however, a mortgage life insurance policy doesn't pay unless the borrower dies while the mortgage itself is still in existence. There are two basic types of mortgage life insurance: decreasing term insurance, where the size of the policy decreases with the outstanding balance of the mortgage until both reach zero; and level term insurance, where the size of the policy does not decrease. Level term insurance would be appropriate for a borrower with an interest-only mortgage. Before buying mortgage life insurance, one should carefully examine and analyze the terms, costs and benefits of the policy and there are two lifespans to consider – borrower’s lifespan and the mortgage's. |
| Fully Funded Documentary Letter Of Credit - FFDLC |
| A written promise of payment provided by a buyer to a seller that is guaranteed to clear by a particular bank. Once an FFDLC document is presented by the seller to the involved bank, the bank is obliged to remit full payment to the seller. The seller may be required to fulfill certain conditions, such as providing proof of shipment of the goods sold to the buyer, before collecting payment from the bank. This method of payment provides assurance to the seller that the buyer has the necessary funds for the transaction and ready for remittance to the seller upon completion of the sale. |
| ETF Wrap |
| A type of special investment portfolio where an investor, with or without the aid of an investment advisor, invests solely in exchange traded funds (ETFs). The composition of each ETF class is initially based on a preselected asset allocation model, and will periodically need to be rebalanced in response to changes in market values. |
| Wrap-Around Loan |
| A loan that is most commonly used with property with an outstanding loan. The seller lends the buyer the difference between the existing loan and the purchase price. The buyer's periodic loan payments are sufficient to repay the existing loan as well as the seller's loan to the buyer. When the loan involves mortgage loans, it is also referred to as a wrap-around mortgage. |
