Investment and Finance

A Money purchase plan is a defined benefit contribution plan in which the participant contributes some part of his or her salary and the employer contributes at the same or a different rate. It is also called an individual account plan.

--- Annual report ---> The Annual report is a yearly record of a publicly held company's financial condition. It includes a description of the companys operations, its Balance Sheet and Income Statement. SEC rules require that it be distributed to all shareholders. A more detailed version is named the 10-K report.

A Back-end loan fund is a mutual fund that charges investors a fee to sell or redeem shares. The fee ranges from 4% to 6%. Some back-end load funds impose a full commission if the shares are redeemed within a designated time such as one year. The commission decreases the longer the investor holds the shares. The formal name for the back-end load is the contingent deferred sales charge.

Book value per share is the ratio of stockholder equity to the average number of common shares. Book value per share is not an indicator of economic worth, since it reflects accounting valuation and not necessarily market valuation.

A Certificate of deposit is also known as a CD or a time deposit, This is a certificate issued by a bank or thrift that indicates a specified sum of money has been deposited. A Certificate of Deposit bears a maturity date and a specified interest rate, and can be issued in any denomination. The duration can be up to five years.

Foreign Exchange rates in the newspaper are often "wholesale" or "interbank" rates that are generally only available to large corporations. These rates are not available to smaller retail customers who want to purchase foreign currency for an foreign trip. Generally, your bank rates will be competitive with other retail bank locations.

Using foreign currency purchased before you leave will mean you will have cash in hand for immediate expenses when you arrive such as taxis, trains, meals, tips etc. When you arrive at your destination the last thing you will want to do is deal with the hassle of standing on a long line to exchange currency at the airport.

In 1999, 11 European countries qualified under the convergence criteria to use the Euro as their currency: Austria, Cyprus, Belgium, Finland, Germany, France, Ireland, Luxembourg, Italy, Portugal, Spain and the Netherlands. Cyprus, Greece, Slovenia, Malta and Slovakia were later admitted, bringing the total countries to 16. Some countries like Turkey and Romania have expressed a desire to join the EU but have not yet met the criteria to join. Notable holdouts include the Scandinavian countries like Norway, Denmark and Sweden, in addition to England. Though these countries are members of the European Union, they have opted out of using the euro as their standard currency. Some countries, like Montenegro, are permitted to use the euro as their currency but have no representation in the European Union. A key strength of the euro is currency stability. Businesses no longer face risk from currency exchange rates and tourists no longer pay the price of currency conversion. Rising costs (inflation) are kept at bay because countries must maintain a low inflation rate in order to join. Furthermore, because the euro inextricably links the economies of its members, the currency provides a disincentive for countries to go to war with the other. Euro-using countries are unable to set their own monetary policy and instead must abide by the policies outlined by the European Central Bank. This lack of autonomy creates difficulties when countries experience an economic downturn. A specific country, such as Greece, is unable to devalue its currency to keep prices stable and increase exports to raise money. This highlights another weakness; the economic troubles of one country become the economic troubles of all euro members. Not all countries will agree on how to handle these problems either. During the Greek debt crisis of 2010, Germany (regarded as one of the strongest economies in Europe) had very different ideas than Greek leaders on how to extricate Greece from its debt.

Capitalization is the process of adding unpaid interest to the principal loan amount. It increases the balance that future interest accrues on and the total gross amount to be repaid.