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Verify that the identity on the CAC Card matches the identity of the expected signer. If they do not match, the system informs the card holder to use the correct card. The process relies on a Public Key Infrastructure (PKI), possession of a CAC and knowledge of the PIN to ensure identity.
- Browse Related Terms: CAC Digital Signature, Common Access Card (CAC), Electronic Signature (or eSignature), Identity Theft, Personal Identification Number (PIN), Phishing, Smishing
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Some employers offer cafeteria plans, more formally known as flexible spending plans, which give you the option of participating in a range of tax-saving benefit programs.
If you enroll in the plan, you choose the percentage of your pretax income to be withheld from your paycheck, up to the limit the plan allows. You allocate your money to the parts of the plan you want to participate in.
For example, you can set aside money to pay for medical expenses that aren't covered by insurance, for child care, or for additional life insurance coverage. As you incur these kinds of expenses, you are reimbursed from the amount you have put into the plan.
Since you owe no income tax on the money you contribute, you actually have more cash available for these expenses than if you were spending after-tax dollars.
However, you must estimate the amount you're going to contribute before the tax year begins, and you forfeit any money you've set aside but don't spend. For example, if you've set aside $1,500 for medical expenses but spend only $1,400, you lose the $100.
In some plans the deadline for spending the money in your flexible spending account is December 31. Other plans provide up to a three-month expension.
- Browse Related Terms: Cafeteria plan, Cash balance plan, Defined Benefit Pension Plan, Defined benefit plan, Defined Contribution Pension Plan, Defined Contribution Plan, Employee Retirement Income Security Act (ERISA), Employer sponsored retirement plan, Federal Insurance Contributions Act (FICA), Flexible spending account, Integrated pension plan, Nondiscrimination rule, Pension, Pension Benefit Guaranty Corporation (PBGC), Plan participant, Portable benefits, Qualified retirement plan, Retirement Accounts, Self-directed retirement plan, Social Security, Vesting, Withholding
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In the bond markets, a call is an issuer's right to redeem bonds it has sold before the date they mature. With preferred stocks, the issuer may call the stock to retire it, or remove it from the marketplace.
In either case, it may be a full call, redeeming the entire issue, or a partial call, redeeming only a portion of the issue.
When a bank makes a secured loan, it reserves the right to demand full repayment of the loan - referred to as calling the loan - should the borrower default on interest payments.
Finally, when the term refers to options contacts, holding a call gives you the right to buy the underlying instrument at a specific price by a specific date. Selling a call obligates you to deliver the underlying instrument if the call is exercised and you're assigned to meet the call.
- Browse Related Terms: assignment, At-the-money, Automatic exercise, Call, Call option, Covered option, Exercise, Go short, Green shoe clause, In-the-money, Incentive stock option (ISO), Long position, Naked option, offset, Option, Option premium, Put option, Short position, Stock option, Strike price, Uncovered option, Writer
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Buying a call option gives you, as owner, the right to buy a fixed quantity of the underlying product at a specified price, called the strike price, within a specified time period.
For example, you might purchase a call option on 100 shares of a stock if you expect the stock price to increase but prefer not to tie up your investment principal by investing in the stock. If the price of the stock does go up, the call option will increase in value.
You might choose to sell your option at a profit or exercise the option and buy the shares at the strike price. But if the stock price at expiration is less than the strike price the option will be worthless. The amount you lose, in that case, is the premium you paid to buy the option plus any brokerage fees.
In contrast, you can sell a call option, which is known as writing a call. That gives the buyer the right to buy the underlying investment from you at the strike price before the option expires. If you write a call, you are obliged to sell if the option is exercised and you are assigned to meet the call.
- Browse Related Terms: assignment, At-the-money, Automatic exercise, Call, Call option, Covered option, Exercise, Go short, Green shoe clause, In-the-money, Incentive stock option (ISO), Long position, Naked option, offset, Option, Option premium, Put option, Short position, Stock option, Strike price, Uncovered option, Writer
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A callable bond can be redeemed by the issuer before it matures if that provision is included in the terms of the bond agreement, or deed of trust.
Bonds are typically called when interest rates fall, since issuers can save money by paying off existing debt and offering new bonds at lower rates. If a bond is called, the issuer may pay the bondholder a premium, or an amount above the par value of the bond.
- Browse Related Terms: Callable bond, Conversion price, Convertible bond, Deep discount bond, Exchange traded notes, Gilt-edged security, Indenture, Noncallable, Original issue discount, Par Value, Prerefunding, Redemption, Sinking fund, Zero-coupon bond, Zero-coupon convertible bond
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A check that a financial institution paid, charged to the account holder's account, and then endorsed. Once canceled, a check is no longer negotiable.
- Browse Related Terms: Account holder, ATM surcharge, Canceled Check (Share Draft), Check Deposit Return, Early Withdrawal Penalty, fee, Fee Charged for Use of Other ATM, Fee Charged for Use of Your Own ATM, Minimum Balance Required, Money Order Fee, Monthly or Annual Fee, Overdraft Fee, Overdraft Protection, Per Check Fee (If Minimum Balance is Not Maintained), Per Check Fee (If Minimum Balance Maintained), Service Fee Per Month
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If you don't pay your premiums, an insurance company can cancel your personal auto policy by giving 10 days written notice. The company is required to give you 30 days written notice if it is canceling your policy for any other reason.
A termination of a policy before its normal expiration date.
Termination of a policy before its normal expiration date.
Termination of an insurance policy by the company or insured before the renewal date.
The termination of a policy at a date other than its annual expiration date.
- Browse Related Terms: Binder, Cancellation, Declarations Page ("Dec Page"), Endorsement, Lapse, Lapsed Policy, Non-renewal, Premium Finance Company, Reinstatement, Rental Reimbursement/Transportation Expenses, Rider, Surcharge
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Termination of an insurance policy by the company or insured before the renewal date.
Texas Department of Insurance and Office of Public Insurance Counsel - Cite This Source - This DefinitionTermination of a policy before its normal expiration date.
A termination of a policy before its normal expiration date.
- Browse Related Terms: Binder, Cancellation, Effective date, Expiration date, Lapse, Lapsed Policy, Non-renewal, Policy period, Reinstatement, Renewal
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A cap is a ceiling, or the highest level to which something can go.
For example, an interest rate cap limits the amount by which an interest rate can be increased over a specific period of time. A typical cap on an adjustable rate mortgage (ARM) limits interest rate increases to two percentage points annually and six percentage points over the term of the loan.
In a different example, the cap on your annual contribution to an individual retirement account (IRA) is $4,000 for 2006 and 2007 and $5,000 in 2008, provided you have earned at least that much. If you're 50 or older, you can make an additional catch-up contribution of $1,000 each year.
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To prevent excessively high payment increases, ARM's place a cap on the amount by which the interest rate may rise at any single adjustment, over the life of the loan, or both.
State of Maine, Department of Professional and Financial Regulation - Cite This Source - This Definition
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Capital is money that is used to generate income or make an investment. For example, the money you use to buy shares of a mutual fund is capital that you're investing in the fund.
Companies raise capital from investors by selling stocks and bonds and use the money to expand, make acquisitions, or otherwise build the business.
The term capital markets refers to the physical and electronic environments where this capital is raised, either through public offerings or private placements.
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Any increase in a capital asset's fair market value is called capital appreciation. For example, if a stock increases in value from $30 a share to $60 a share, it shows capital appreciation.
Some stock mutual funds that invest for aggressive growth are called capital appreciation funds.
- Browse Related Terms: American depositary receipt (ADR), Annuity unit, Block trade, Capital appreciation, Exchange-traded fund (ETF), expense ratio, Institutional fund, Mark to the market, Net asset value (NAV), Offshore fund, Open-end mutual fund, Proprietary fund, share, Standard & Poor's Depositary Receipt (SPDR), Underlying investment, Unit investment trust (UIT), Unit trust
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An increase in the value of a stock.
- Browse Related Terms: AICPA PFP, Asset allocation, Asset Classes, Capital appreciation, Cash Equivalents, Distribution, diversification, dividend, Income, inflation, Service Credit, Yield
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Also known as capital appreciation, capital gain measures the increase in value of an asset over time.
Also known as capital appreciation, capital gain measures the increase in value of an asset over time.
- Browse Related Terms: Basis Point (bp), Benchmark, bp (Basis Point), Capital Gain, Endowment Funds, Loss (Realized Gain), Loss (Unrealized Gain), Non-endowment Funds, Operating Monies, Realized Gain (Loss), Reverse Repurchase Agreement, Unrealized Gain (Loss), Yield Curve, Yield to Maturity
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The difference between an asset's basis (usually the cost) and sale price. In appropriate cases, a Certificate of Divestiture allows a financial disclosure filer to defer paying taxes on capital gain.
When you sell an asset at a higher price than you paid for it, the difference is your capital gain. For example, if you buy 100 shares of stock for $20 a share and sell them for $30 a share, you realize a capital gain of $10 a share, or $1,000 in total.
If you own the stock for more than a year before selling it, you have a long-term capital gain. If you hold the stock for less than a year, you have a short-term capital gain.
Most long-term capital gains are taxed at a lower rate than your other income while short-term gains are taxed at your regular rate. There are some exceptions, such as gains on collectibles, which are taxed at 28%. The long-term capital tax rates are 15% for anyone whose marginal federal tax rate is 25% or higher, and 5% for anyone whose marginal rate is 10% or 15%.
You are exempt from paying capital gains tax on profits of up to $250,000 on the sale of your primary home if you're single and up to $500,000 if you're married and file a joint return, provided you meet the requirements for this exemption.
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A income tax term referring to profit or loss resulting from the sale of an asset, such as a security.
- Browse Related Terms: bond, capital gain or loss, cash equivalent, Debt, income fund, Interest, Maturity, money market, money-market fund, real return, realized and unrealized gain/loss, Risk, treasury bills (t-bills), Zero-coupon bond
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The difference between the price at which you buy an investment and the price at which you sell it.
- Browse Related Terms: capital gain or loss, Contingency order, Day trader, Floor trader, home equity, Limit order, Limit price, Markdown, markup, Stop price, Stop-limit order, Tailgating, Trader
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When mutual fund companies sell investments that have increased in value, the profits, or capital gains, are passed on to their shareholders as capital gains distributions.
These distributions are made on a regular schedule, often at the end of the year and are taxable at your regular rate unless the funds are held in a tax-deferred or tax-free account.
Most funds offer the option of automatically reinvesting all or part of your capital gains distributions to buy more shares.
- Browse Related Terms: Capital gains distribution, Compounding, Direct investment, Direct purchase plan (DPP), Distribution, dividend, Dividend reinvestment plan (DRIP), dollar cost averaging, Fractional share, Growth, January Effect, reinvestment, total return, Total return index
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A capital gains tax is due on profits you realize on the sale of a capital asset, such as stock, bonds, or real estate.
Long-term gains, on assets you own more than a year, are taxed at a lower rate than ordinary income while short-term gains are taxed at your regular rate.
The long-term capital gains tax rates on most investments is 15% for anyone whose marginal federal tax rate is 25% or higher, and 5% for anyone whose marginal rate is 10% or 15%. There are some exceptions. For example, long-term gains on collectibles are taxed at 28%.
You are exempt from capital gains tax on profits of up to $250,000 on the sale of your primary home if you're single and up to $500,000 if you're married and file a joint return, provided you meet the requirements for this exemption.
- Browse Related Terms: Basis, Basis price, Capital Gain, Capital gains tax (CGT), Capital loss, Community property, Convertible hedge, Cost basis, Earnings, Fund family, Investment Income, Long-term capital gain (or loss), Paper profit (or loss), Phantom gains, Profit, Realized gain, Return, Return on investment, Sell short, Step-up in basis, Unrealized gain, Unrealized loss, Wash sale
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When you sell an asset for less than you paid for it, the difference between the two prices is your capital loss.
For example, if you buy 100 shares of stock at $30 a share and sell when the price has dropped to $20 a share, you will realize a capital loss of $10 a share, or $1,000.
Although nobody wants to lose money on an investment, there is a silver lining: You can use capital losses to offset capital gains in computing your income tax. However, you must use short-term losses to offset short-term gains and long-term losses to offset long-term gains.
If you have a net capital loss in any year - that is, your losses exceed your gains - you can usually deduct up to $3,000 of this amount from regular income on your tax return. You may also be able to carry forward net capital losses and deduct on future tax returns.
- Browse Related Terms: Basis, Basis price, Capital Gain, Capital gains tax (CGT), Capital loss, Community property, Convertible hedge, Cost basis, Earnings, Fund family, Investment Income, Long-term capital gain (or loss), Paper profit (or loss), Phantom gains, Profit, Realized gain, Return, Return on investment, Sell short, Step-up in basis, Unrealized gain, Unrealized loss, Wash sale
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Capital markets are the physical and electronic markets where equity and debt securities, commodities, and other investments are sold to investors.
When you place an order through a brokerage firm, trade online, or use a dividend reinvestment plan (DRIP), you're participating in a capital market.
Corporations use capital markets to raise money through public offerings of stocks and bonds or private placements of securities to institutional investors, such as mutual fund companies.
- Browse Related Terms: Capital, Capital markets, Initial public offering (IPO), Investment bank, Issuer, Lead underwriter, Private placement, Red herring, Syndicate, Underwriter, Underwriting
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Capital preservation is a strategy for protecting the money you have available to invest by choosing insured accounts or fixed-income investments that promise return of principal.
The downside of capital preservation over the long term is that by avoiding the potential risks of equity investing, you exposure yourself to inflation risk.
That's the case because your investments are unlikely to increase enough in value to offset the gradual loss of purchasing power that's a result of even moderate inflation.
- Browse Related Terms: Accredited investor, Appreciation, Boiler room, Capital preservation, churning, Collectible, Financial pyramid, Formula investing, Haircut, Indexed annuity, Inflation-adjusted return, opportunity cost, Real interest rate, Risk, Risk Tolerance, Time value of money
All classes or types of shares representing ownership of the issues.
- Browse Related Terms: capital stock, common shares, equity, long, Odd lot, Prospectus, securities act, shares
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In the context of bank supervision, capitalization refers to the funds a bank holds as a buffer against unexpected losses. It includes shareholders’ equity, loss reserves, and retained earnings. Bank capitalization plays a critical role in the safety and soundness of individual banks and the banking system. In most cases, federal regulators set requirements for adequate bank capitalization.
- Browse Related Terms: Agency Code, Branch Office, Capitalization, Depository Institution, Federal Financial Institutions Examination Council (FFIEC), Federal Home Loan Bank Act of 1932, Federal Home Loan Bank Board (“FHLBank Board”), Federal Home Loan Banks (FHLBanks), Federal Housing Administration (FHA), Federal Savings and Loan Insurance Corporation (FSLIC), FHA Approved Lenders, Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), Nondepository Institution, Respondent or Reporter ID (RID), Thrift
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Car insurance covers theft of and damage to your car or damage that your car causes, plus liability protection in case you are sued as a result of an accident. Your state may require proof of insurance before you can register your car.
As a car owner, you pay premiums set by the insurance company based on the value of your car and the risk the company believes you pose. The insurance company agrees to cover your losses, subject to a deductible and the limits specified in the contract.
Some states have insurance pools that allow car owners who have been turned down elsewhere to obtain coverage.
- Browse Related Terms: Car insurance, Catastrophic illness insurance, claim, Credit Disability Insurance (CDI), Deductible, Exclusion, Homeowner's insurance, Indemnity insurance, Insurance (Hazard), Named perils policy, Participating policy, Policyholder or policy owner, Pre-existing Condition, Preferred Risk Policy (PRP), Rider