Ask a CPA

There are many laws that employers are subject to concerning equal employment and prohibiting discrimination. Some questions you should not ask on an interview are: Do you have any disabilities?, How old are you?, What is your religious affiliation?, What is your ethnic background?, Are you married?, Do you have children?, What is your sexual orientation?.

The Expense ratio is the percentage of the assets that were spent to run a mutual fund as of the last annual statement. This includes expenses such as management and advisory fees, overhead costs and the 12b-1 distribution and advertising fees. The expense ratio does not include brokerage costs for trading the portfolio, although these are reported as a percentage of assets to the SEC by the funds in the Statement of Additional Information. The Statement of Additional Information is available to shareholders on request. Neither the expense ratio or the Statement of Additional Information includes the transaction costs of spreads, normally incurred in unlisted securities and foreign stocks. These two costs can add significantly to the reported expenses of a fund. The expense ratio is often termed as an Operating Expense Ratio.

Subscription Right is a privilege granted to owners of certain stocks to purchase newly issued securities in proportion to their holdings usually at prices below the current market price. Rights have a market value of their own and are actively traded. They are different from warrants in that they must be exercised within a relatively short period of time. "Ex-rights" in connection with the rights offering with a stock purchase means shares of stock that are trading without the rights attached. The Ex-rights date is the date on which a share of common stock begins trading "ex-rights", without the right.

"Execution" is the process of completing an order to buy or sell securities. Once a trade is executed, it is reported on a Confirmation Report. The settlement which is the payment and transfer of ownership, occurs in the U.S. between 1 day for mutual funds and 5 days with stocks after an order is executed.

Money markets are for borrowing and lending money for three years or less. The securities in a money market can be either U.S.government bonds, treasury bills or commercial paper from banks and companies. Money market demand accounts are accounts that pay interest based on short-term interest rates. A Money market fund is a mutual fund that invests only in short-term securities, such as commercial paper, bankers acceptances, repurchase agreements and government bills. The net asset value per share is maintained at $1.00. Such funds are not federally insured.

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 Builder buy down loan is a mortgage loan on newly developed property that the builder subsidizes during the beginning years of the development.
The builder uses cash to buy down the mortgage rate to a lower level than the prevailing market loan rate for a period of time. The typical buydown is 3% of the interest rate amount for the first year, 2% for the second year, and 1% for the third year. This type of loan is often referred to as a 3-2-1 buydown loan.