A direct investment is the purchase or sale of a company’s stock through that company alone, without the intervention of a broker. This is done via a Direct Stock Purchase (DSP) or Dividend Reinvestment Plan (DRIP), where dividend income automatically goes to buying more stock. Basically, you deal with the company directly and eliminate the middleman.
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A Direct Investment is…
Wednesday, August 5th, 2009A Market is…
Wednesday, August 5th, 2009A market is anywhere people come together to buy and sell things. At a farmers market, farmers and consumers come together to buy and sell produce, but markets can be exchanges for anything. Generally when we hear newspeople talk about “the market,” they are talking about the stock market – which refers to not only the physical trading floor of the NYSE but also online or electronic markets where people come together to buy and sell stocks.
Value Added Tax is…
Wednesday, August 5th, 2009Value added tax is a tax levied on commodities after they go through production to reflect the increase in value. For example, a cake is made out of many ingredients, but the finished product sells for more than the sum of its parts, so the company selling the cake pays value added tax on this price increase. However, since sellers usually just hike up their prices to compensate for value added tax, it’s the consumers who really pay it in the end.
Filing Status is…
Wednesday, August 5th, 2009Filing status is the category you fill out on your income tax return that determines the rate of your income tax (for example, a filing status of “single” will result in your paying more taxes than someone who has approximately the same income but files as “head of household”). There are five filing statuses: single, married filing separately, married filing jointly, head of household, and qualifying widow(er) with dependent child.
Breaking Even is…
Monday, August 3rd, 2009Breaking even is the point where your total revenue equals your total cost – you haven’t made any money yet, but you also haven’t lost any. For example, when you buy a financial instrument there are the costs to purchase the item plus transaction costs – like paying your broker. The investment doesn’t “break even” until the value increases enough to cover ALL costs.
Restricted Funds are…
Monday, August 3rd, 2009Restricted funds are grants given to a recipient (usually a nonprofit organization) on the condition that the money be used in a specific way. For example, restricted funds could be given to a medical research organization only for use in finding a cure for a specific disease.
A Management Buyout is…
Monday, August 3rd, 2009A management buyout is a buyout of a firm or a piece of a firm by the firm’s own management. For example, Company A owns Company B, and the management of Company B decides to buy their own company from Company A – that’s when you get a management buyout.
A Personal Exemption is…
Monday, August 3rd, 2009A personal exemption is a tax deduction that is designed to represent the amount of money you’d need to survive at subsistence level – you subtract this amount from your taxable income. You can claim personal exemptions for yourself, your dependents, and (in certain situations) your spouse.