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Q: what is the "credit support annex"?

Category: glossary , Asked by: N. Pace from Richmond, Canada

A: "credit support annex " is A credit support annex provides credit protection by setting forth the rules governing the mutual posting of collateral. CSAs are used in documenting collateral arrangements between two parties that trade privately negotiated (over-the-counter) derivative securities. The trade is documented under a standard contract called a master agreement, developed by the International Swaps and Derivatives Association (ISDA). The two parties must sign the ISDA master agreement and execute a credit support annex before they trade derivatives with each other. In addition to executing the ISDA master agreement and credit support annex, issuers must implement proper resolutions that give authorization to execute any derivative transactions. Each issuer must also obtain an opinion from its respective legal counsel about whether both parties can enter into swap transactions. Issuers must also ensure that such contracts are binding and enforceable, and obtain final credit approval from a bank. Visit FXCM

    do you know what "bill-and-hold basis" is?

    Category: glossary by L. E. From Ireland

    A method of conducting sales by billing the customer on the same day the transaction occurs, but not delivering the goods until a later date. Using the bill-and-hold basis is sometimes regarded as a controversial practice because allowing the seller to receive payment now, but making them wait a length of time before transferring the product could be used to inflate revenues meant for subsequent quarters. The bill-and-hold basis is one method of revenue recognition. According to the Securities and Exchange Commission, it is the buyer's responsibility to request that a transaction be on a bill-and-hold basis and must have substantial business purposes in doing so. In addition to those criteria, any goods sold under this basis must be finished goods at the time of sale and not be available to fulfill any other orders. In 1998, Sunbeam CEO, Al Dunlap used a bill-and-hold strategy in order to make Sunbean's financial performance better than it really was by artificially inflating Sun Beam's revenue by 18%. Eventually, Dunlap was relieved of his station as the board of directors realized that he did not do anything to materially improve the company's financial situation.

    do you know what the "implicit rental rate" is?

    Category: glossary by T. Parrish from Odessa, United States

    The opportunity costs that a firm incurs as a result of using their own assets for ongoing operations instead of other alternative uses. The implicit rental rate can be either greater than or less than the firm's cost of capital. In the event that the implicit rental rate is lower than the firm's cost of capital, then the firm is not likely to be in business for very long. This is because the firm's cost to operate its assets, as measured by its cost of capital, is greater than the firm's best alternative use for those assets.

    what is "catch-up contribution"?

    Category: glossary by N. Sharpe from United States

    a "catch-up contribution " is A type of retirement savings contribution that allows people over 50 to make additional contributions to their 401(k)s and/or individual retirement accounts. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) created this provision so that older individuals would be able to set aside enough savings for retirement. Originally, the ability to make catch-up contributions under EGTRRA was set to end at around 2011. However, the Pension Protection Act of 2006 made catch-up contributions and other pension-related provisions permanent. Although using catch-up contributions is a great way for many people to expand their retirement savings, a report from the Vanguard Center for Retirement Research entitled "Catch-Up Contributions in 2004: Plan Sponsor and Participant Adoption" (2004) found that only 13% of eligible candidates use catch-up contributions to expand their savings.

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    please tell me what the "investment real estate" is
    "investment real estate " is Real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence, while the others are used to generate rental income and profits through price appreciation. The tax implications for investment real estate are often different than those for residential real estate. Common examples of investment properties are apartment buildings and rental houses, in which the owners do not live in the residential units, but use them to generate ongoing rental income from tenants. Those who invest in real estate also expect to generate capital gains as property values increase over time. Visit FX Universal

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