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Q: what is "disparity index"?

Category: glossary , Asked by: X. Grimes from Luxembourg, Luxembourg

A: a "disparity index " is A technical indicator that measures the relative position of the most recent closing price to a selected moving average and reports the value as a percentage. A value greater than zero suggests that the asset is gaining upward momentum, while a value less than zero can be interpreted as a sign that selling pressure is increasing. Extreme values of this indicator can be a very useful tool for contrarian investors to foretell periods of exhaustion. Once the price is excessively pushed in one direction, there are very few investors to take the other side of the transaction when the participants wish to close their position, ultimately leading to a price reversal. Similar to the ROC indicator, important signals are generated when the indicator crosses over the zero line because it is an early signal that momentum is building. Visit FXCM

    do you know what "loss leader strategy" is?

    Category: glossary by Ally D. From Canada

    A business strategy in which a business offers a product or service at a price that is not profitable for the sake of offering another product/service at a greater profit or to attract new customers. This is a common practice when a business first enters a market; a loss leader introduces new customers to a service or product in the hope of building a customer base and securing future recurring revenue. The loss leader strategy is more than just a nifty business trick - it is a successful strategy if executed properly. A classic example is that of razor blades. Companies like Gillette essentially give their razor units away for free, knowing that customers will have to buy their replacement blades, which is where the company makes all of its profit. Another example is Microsoft's Xbox video game system, which was sold at a loss of more than $100 per unit to create more potential to profit from the sale of higher-margin video games.

    please define a "company owned life insurance"

    Category: glossary by A. A. From United States

    "company owned life insurance " is A type of life insurance policy taken out by a company on the lives of employees whom the company considers to be of vital importance to its operations. Under this type of plan, the company in question pays the premium on the insurance but is also the plan's primary beneficiary. There are a few reasons why a company would take a life insurance policy out on key employees. For one, the tax-free proceeds that are received after the death of a key person can be used to cover any costs that would arise when hiring that individual's replacement. The insurance policy can also be used to cover employee benefit liabilities. However, the most notable benefit to a company that institutes a COLI policy comes from the benefit to after-tax net income. This benefit arises when the cash value of the policy becomes larger than the premiums paid. According to an industry survey conducted in 1999 and cited by New York Life Insurance Company, 68% of the Fortune 1000 companies use COLI programs.

    please tell me what "heroes earned retirement opportunities act" is

    Category: glossary by B. Brady from Pomona, United States

    a "heroes earned retirement opportunities act " is Legislation passed by Congress on May 18, 2006, that allows tax-free combat-related compensation received by military personnel to be considered taxable income for IRA contribution purposes. Military personnel also will be able to make IRA contributions based on combat pay earned from January 2004 to May 2006 - up to two years before the act became law. Previous to the act's creation, military personnel who primarily received combat pay as their main source of compensation would not be able to contribute to an IRA. Because combat pay is not considered taxable and IRA regulations stipulate that the maximum IRA contribution is the lesser of either $4,000 or the amount of taxable income received, the maximum contribution allowed was effectively zero dollars.

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    please define "crummey power"
    A technique that enables a person to receive a gift that is not eligible for a gift-tax exclusion, and change it into one that is eligible. Crummey power is often applied to contributions in an irrevocable trust; often in respect to life insurance. In order for the Crummey power to work, the gift must be stipulated as being part of the trust when it is drafted and the gift cannot exceed $12,000 annually per beneficiary of the trust (among other requirements). This is how Crummey power works: When a donor makes a contribution to the irrevocable trust, the beneficiaries must be notified that the funds can be withdrawn within a certain time period (no less than 30 days). When the beneficiary does not withdraw the funds, they go back to the trust and are then subject to the annual gift tax exclusion. The donor will usually inform the beneficiary of his or her intentions to use the Crummey power, so that the beneficiary declines to withdraw the gift when given the opportunity. Crummey power is named after Clifford Crummey who wanted to build a trust fund for his sons, and be able to reap the yearly tax exemption benefits as well. Visit MIG Investments

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