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Understanding The OTCBB

Understanding The OTCBBWhat is the OTC Bulletin Board?

The OTC Bulletin Board is an electronic, interdealer quotation system that displays real-time quotes, volume information for over-the-counter equity securities (those securities not listed on the NASDAQ or a national securities exchange), and last-sale prices for many equity-securities in the United States.
The OTC Bulletin Board is a service delivered to broker-dealers who may subscribe to the system for a yearly fee. Once the service is acquired, a broker-dealer or financial institution can effectively look up prices or enter quotes for OTC securities.
The Financial Industry Regulatory Authority is the administrative and authoritative body responsible for running and overseeing the OTCBB. That being said, FINRA announced in September of 2009 that the agency would be selling the OTCBB. The sale was initiated because competitors—like the Pink OTC Markets who are rumored to purchase the OTCBB—are stripping the OTCBB of its listing powers. Prior to 2008, the OTCBB collected 100% of quotes, but this number has declined due to the rise in competition.
The OTCBB is not part of the NASDAQ stock exchange; however, all companies quoted or listed on the OTCBB must satisfy the filing and full reporting requirements of the SEC. Although regulations exist, the companies listed on the OTCBB possess no responsibility to report specifics associated with a market capitalization, a minimum share price, and corporate governance. That being said, companies may be “de-listed” from the OTCBB for falling below a minimum share price, a minimum capitalization or other requirements that end up being quoted on the OTCBB.
Those stocks not listed or quoted on the OTCBB (stock of non-reporting companies that do not possess current SEC filings) may be quoted in the Pink Sheets. The majority of companies listed on the OTCBB are dually quoted, meaning they are listed on both the OTCBB and the Pink Sheets.
The OTCBB is an electronic trading service offered by the National Association of Securities Dealers. Companies listed on the OTCBB are required to file current financial statements with either the SEC or a banking/insurance regulator.
What kind of Stocks are listed on the OTCBB
Those stocks traded in OTC markets (such as the Pink Sheets or the OTCBB) typically possess minimal market capitalization.
Stocks traded and quoted on the OTCBB possess low trade volumes and are typically classified as microcaps or penny stocks. As a result of this classification, the majority of retail and institutional investors will avoid the stocks listed on the OTCBB due to the risks associated with share price manipulation and the greater potential for fraud.
Due to the aforementioned risks, the Securities and Exchange Commission commonly issues warnings to investors to be aware of manipulation and fraud schemes associated with the companies listed on the OTCBB. As a result of this investor skepticism, most companies will seek listing on more established marketplaces such as the NYSE, AMEX, or NASDAQ.

Understanding Prospectus

Understanding ProspectusWhat is a Prospectus?

In regards to finance, a prospectus is a formal legal document used by institutions and businesses to elucidate and detail the securities they offer to investors and the general public.
A common prospectus provides investors with information concerning stocks, bonds, mutual funds and other investments aligned with the company, primarily a description of the company’s business model, their financial statements, and biographies of the underlying directors and officers of the company. The information of the directors and officers of the company typically contain information regarding their compensation, any legal matters aligned with the company, and a comprehensive list of material properties that the underlying company possesses. 
In the case of an initial public offering, a prospectus will be distributed by the underwriters aligned with the offering or the brokers offering the IPO to potential investors.
Why is a Prospectus Important?
As a result of the information contained in a prospectus, the document is used as a fundamental evaluation. A prospectus contains the financial information of a company, including all debts and assets, to better illustrate the company’s financial health and standing in their particular market or sector.
By viewing a prospectus an individual investor or a prospective investor can observe the company’s business model, their ability to meet future goals, and the tangible statistics which elucidate upon the vitality of the company. Without the issuance of a prospectus, investors would be ignorant towards the financial statistics and numbers of a company. The information within a prospectus is necessary when evaluating whether an investment is suitable or worthwhile. 
A Prospectus for a Securities Offering:
In the United States, a prospectus for a securities offering is required to be filed with the Securities and Exchange Commission (SEC). The filing with the SEC is part of the registration statement, which is the formal starting point of an initial public offering.
The issuer of the security may not use the prospectus to finalize any sales until the registration statement has been affirmed and declared effective by the Securities and Exchange Commission. This simply means that the securities offers comply with the various rules governing disclosure.
Companies must file Form 10-K with the Securities and Exchange Commission and meet the requirements for market capitalization. Following this adherence, it is permissible to offer securities using a simplified prospectus that will incorporate information referenced to its SEC filings.
Prospectus Format:
The prospectus is the formal document that describes securities offered for public sales; the prospectus is created according to a well-defined format. The format explicitly defines the information required for a prospectus to be legally recognized.
Although writing styles may vary, all filings must follow certain rules. A prospectus must be updated annually, must disclose all fees associated with investment, all tax liabilities and must effectively calculate the potential risk of investment in the underlying company. Additionally, the prospectus must contain an SAI or Statement of Additional Information.
There are eight formal categories that comprise the accepted prospectus format: Performance, Risk, Fees, Management, Investment Objective, Services, Buying or Selling Shares, and the Statement of Additional Information.
The prospectus is a binding legal document that must truthfully disclose all pertinent information to potential investors. Any attempts to falsify information or any material that may result in investigation by the SEC will be punishable by fine and or imprisonment.

6 Types of Global Finance

6 Types of Global FinanceWhat is Global Finance?

Global finance refers to the financial system consisting of regulators and various financial institutions that conduct their business on an international level. As a result of this definition, global finance does not constitute any financial businesses or regulators that act on a national or regional level.
The primary components of global finance are the enormous international institutions, such as the bank for International Settlements or the International monetary Fund, as well as various national agencies and government departments, such as various central banks, finance ministries, and those private companies who act on a global scale.

Prominent International Institutions aligned with Global Finance:
The International Monetary Fund is a financial institution that is responsible for maintaining the international balance of payments accounts of its member states. The International Monetary Fund may also act as a lender (typically in last resort situations) for state members who are in financial distress due to currency crises or struggles that revolve around meeting the balance of payment when debt default is present.
Membership in the International Monetary Fund is based on quota or the amount of funding a member state (country) provides to the fund. The evaluation of funding is based on a relative investigation of the member state’s role in the international trading system and global finance in general.
Another prominent member of global finance is the World Bank, which is an institution who aims to offer funding for development projects that, for the most part, reside in developing nations. The World Bank assumes the credit risk of these developing nations; the World Bank will provide financing to projects that otherwise would not be able to access such funding.
The World Trade Organization is another principle player aligned with global finance. The World Trade Organization is responsible for settling disputes and negotiating international trade agreements with various international companies, institutions or government agencies.

Types of Private Participants in Global Finance:
To be considered a participant in global finance a company or organization must possess international clients or conduct business transactions overseas. The following types of institutions also play a prominent role within global finance:
o    Commercial Banks
o    Insurance Companies
o    Sovereign Wealth Funds
o    Mutual Funds
o    Pension Funds
o    Private Equity Firms and Hedge Funds

International Finance Corporation Role

International Finance Corporation RoleWhat is the International Finance Corporation?

The International Finance Corporation is a United Nations agency that directly invests in companies and guarantees loans to private investors in the global marketplace. The International Finance Corporation is affiliated with the World Bank and was created to promote a sustainable private sector through the investment in developing economies as a means to reduce poverty and improve the lives of those residing in struggling nations.
The funds delivered to such nations are typically used to benefit the nation as a whole. Through the delivery of funds, these developing economies can invest and subsequently supply their people with improved public services such as paved roads, public transportation, the establishment of business centers, and an overall improvement of the nation’s infrastructure.
The International Finance Corporation is headquartered in Washington D.C. and shares the primary responsibilities and objectives of all World Bank Group Institutions—to improve the overall quality of the lives of people in developing countries.
To help those in struggling nations, the International Finance Corporation provides micro loans as well as other forms of financing to developing countries. The International Finance Corporation was established in 1956, and stands alone as the world’s largest multilateral source of equity financing for private sector projects in developing economies worldwide.

Role of the International Finance Corporation

The International Finance Corporation aims to promote sustainable development of the private sector in developing nations through the various means:
o    The International Finance Corporation will finance private sector projects and an assortment of business ventures in the developing world.
o    The International Finance Corporation will help private companies in developing nations in regards to mobilizing and gaining access to financing streams in the international financial markets.
o    The International Finance Corporation will provide technical assistance and professional advice to various businesses and government agencies throughout the world. 
Ownership and Management Structure of the International Finance Corporation:
The International Finance Corporation is comprised of 182 member countries who band together to collectively distribute the company’s unique policies. To gain membership, a country must first acquire membership to the International Bank for Reconstruction and Development. The International Finance Corporation shares capital, which is delivered by its member countries. The voting privileges of the member countries are proportional to the number of shares held—tied-into the amount invested.
The International Finance Corporation is comprised of a Board of Governors who delegates the majority of their powers to the IFC’s board of Directors. The IFC is also managed by the company’s CEO, President and Executive Vice President.
International Finance Corporation’s funding:
The International Finance Corporation’s equity and investment policy is funded out of the capital paid-into the corporation. Additionally, funds are obtained through the retained earnings, which is primarily comprised of the corporation’s net worth. The IFC possesses a strong shareholder support, triple-A bond ratings, as well as a substantial capital base, which allows the company to raise funds in all international markets.

What You Didn’t Know About Finance Management

What You Didn't Know About Finance Management

Finance Management Defined:

 

Financial management is a subject in finance that institutes and elucidates on the planning for an individual or business enterprise for long-term purposes. Financial management can be delivered as a course load in an educational environment or may be delivered by a financial professional, such as a financial planner or adviser.
 
 
Financial management aims to ensure a positive cash flow for the individual consumer or investor through the institution of efficient investment, habitual savings, and frugal spending. The practice includes the administration and re-evaluation of financial assets as they pertain to an effective long-term financial plan. Additionally, financial management covers and elucidates upon the process of identifying and subsequently managing the potential risks associated with leverage, investment and spending beyond one’s means.
 
 
The primary concern or focus of financial management deals with the assessment—as oppose to the techniques—of financial quantification. If hired, a financial manager will evaluate the available data (financial plans, tax statements, income statements and expenditures) to judge the performance of an individual’s financial statements or a business model.
 
 
As a result of this process and concern, financial management aims to maximize efficiency through the administration of a thorough cost/benefit analysis. Financial management thus, will investigate and evaluate the expenditures of a consumer or business enterprise and compare those costs to their respective investments and income. Furthermore, the field of financial management will delve deeper into an enterprise’s or individual’s financial state by evaluating their respective long-term goals and the means utilized to achieve such goals.
 
 
Various Levels of Financial Management
 
 
In a broad sense, the process or study of financial management takes place at two distinct levels: the individual interpretation and the business application.
 
 
At the individual level, the process of financial management involves the creation of a financial plan in accordance with the resources and assets of the respective individual. In the most simplistic of senses, those individuals who earn high incomes or who hold a surplus of cash must invest their money wisely to negate the impact of taxation and inflation. In this situation those individuals must also be wise in how they spend their discretionary income; individuals with a surplus must make financial decisions that will benefit them in the long-run and help them achieve their financial goals in the future.
 
 
From a business point of view, the process or study of financial management is typically associated with financial control and the institution of financial planning. Financial planning will seek to quantify the various financial resources of a business model and subsequently compare them to its expenditures to create a suitable investment strategy.
 
 
In contrast, financial control refers to a business operation’s cash flow and the effective monitoring of the cash flow that is necessary to establish a strong business model. Cash inflow refers to the amount of money coming into the respective corporation, while the outflow refers to the corporation’s expenditures. Managing this flow of money in relation to the corporation’s budget is essential to institute and maintain an efficient business model. 

Quick And Easy Facts About Low APR Credit Cards

Quick And Easy Facts About Low APR Credit CardsWhat does APR mean?

APR (annual percentage rate) is an economic variable used to describe the current interest rate for a whole year.

APRs are attached to credit cards to signify the interest payments attached to their specific line of credit. The APR of a credit card is outlined in the card’s disclosure statement. Many cards have variable APRs which will attach higher or lower interest rates depending on the spending habits of the card user and the items being purchased

The annual percentage rate is the percentage of interest paid for a 12-month period, meaning, if an individual possesses an APR of 10% their monthly interest percentage is .833%. The monthly interest is the amount that the issuer will charge to the remaining unpaid balance per month. For example, a card with an 18 percent APR has a monthly rate of 1.5%. If the cardholder has an unpaid balance of $500, the 1.5% is attached to the remaining balance and the holder is forced to pay an additional $7.50 each month.

The APR is listed as a percentage and typically attached to a credit card to describe the additional payments (used to satisfy the individual’s interest obligation) that the borrower is forced to pay to for the use of credit.

The APR is a finance charge expressed as an annual rate and takes the form of two specific definitions: the nominal APR and the effective APR. The nominal APR is the simplified interest rate delivered as a yearly percentage while the effective APR is the compound interest rate, which includes a fixed fee.

The nominal APR is calculated as the rate delivered for a payment period multiplied by the number of payment periods in that specific year.

The APR is delivered as an annualized rate rather than the monthly fees or rates that are typically applied to mortgages or other long-term loans.

Factors that Affect an APR

The APR on a credit card will fluctuate based on a number of factors and variables, the most critical of which is the holder’s credit history. Additionally, credit card APRs may change over time as interest rates, the Federal Reserve rate and the prime rate fluctuate to control inflation and to encourage borrowing.

Low APR Credit Cards

As a result of these fluctuations and factors, low APR credit cards today may not appear to be low APR credit cards in 5 or 10 years. Given the instability of the credit market and other negative macroeconomic issues present today, low APR credit cards contain an APR between 8 and 12%. Very rarely will an individual obtain low APR credit cards with a rate below 10 percent; however, the majority of card issuers will offer 0 APR for a fixed amount of time.

Those individuals with higher credit scores will be awarded with a lower APR. Lower APR credit cards are awarded to an individual with a higher credit score because of the mitigated risk of default—the issuer of the card views the individual as a safe investment and therefore grants the individual with the ability to possess 0 APR credit cards or credit cards with low APRs. The variables that calculate the APR can fluctuate upwards to 50%, meaning some cards may carry an APR of 50% while others may have an APR of 0.

The APR is only attached to the remaining balance of a credit card. If the individual fails to pay the complete balance owed and opts instead to pay the minimum balance, the APR will be attached to the remaining balance and then carried over to the following month.

Understanding Capital Gain

Understanding Capital GainWhat is a Capital Gain?

A capital gain is a profit that is realized from the investment into a capital asset (such as bonds, stocks, or real estate). A profit is realized in an investment when the return on the investment exceeds the purchase price (the price paid for the investment) of the particular asset or security purchased. As a result, a capital gain is the difference between higher selling price and a lower purchasing price, which subsequently results in a realized gain for the investing party. In contrast, a capital loss will arise if the proceeds from the sale of a capital investment or asset is less than the purchasing price.
A capital gain is commonly referred to as “investment income” that will arise in relation to the prices of real assets such as property, equity investments such as stocks or bonds, and intangible assets such as goodwill.
The majority of countries, including the United States, will impose a tax on capital gains that is placed on both individuals and corporations who are awarded a profit through their particular investments. Depending on the tax policy of the particular government, forms of relief may be made available to those that invest in the aforementioned assets. Relief on a capital gain is awarded in relation to holdings in certain assets, such as common stocks, to help encourage investment and entrepreneurship or to compensate for the negative effects of inflation.
Capital Gains Tax:
The capital gains tax is implemented on any capital asset that generates a real profit, either following the sale of the asset or through any means that generates increased value, such as in the way of interest. The amount of capital gains tax implemented is based on the increase in the net worth of the underlying asset.
The most common capital gains taxes are placed on the sale of stocks, property, bonds, and property. Not all developed nations implement this form of taxation and the ones that do levy the capital gains tax will impose different rates of taxation for corporations and individuals.
For the sale of equities that generate a profit, the corresponding national or state legislation will institute an array of fiscal obligations that must be adhered to regarding one’s capital gains.
In the United States, all individual and corporate tax payers will pay income tax on the net total of all their capital gains just as they would on any sort of income earned. That being said, the tax percentage is lower on long-term capital gains, which are profits realized on the sale of assets that have been held for over one year following the sale.
The tax rate on long-term capital gains was reduced in 2003 to 15% or 5% for individuals in the lowest two income tax brackets. In contrast, short-term capital gains possess higher tax rates; these forms of gains are typically taxed as ordinary income.
The Internal Revenue Service allows individual to defer their capital gains taxes with tax planning strategies (primarily structured sales) such as charitable trusts, private annuity trusts, installment sales, and a 1031 exchange.
The United States taxation model is unique in regards to capital gains tax because the country will levy a tax on worldwide income; the tax is placed on income no matter where in the world the individual resides.

Negative Amortization Quick Outline

Negative Amortization Quick OutlineWhat does Amortization mean?

Amortization refers to the distribution of a single lump-sum cash flow into many smaller cash flow payments or installments, as determined through an amortization table or schedule.
In the most common of meanings, an amortization is a loan with a unique repayment structure. Unlike other repayment models, each repayment in an amortization consists of satisfying both the principal balance and the interest attached to the loan.
Amortization is primarily used in loan repayments, most commonly in mortgage loans or sinking funds. The payments are divided into equal amounts for the duration of the maturity schedule. As a result of this uniformity, the amortization is regarded as the simplest repayment model. That being said, a larger amount of the payment towards the amortization is applied to the interest of the loan at the beginning of the amortization schedule, while more money is used to satisfy the principal at the end of the amortization loan.
Negative Amortization:
In regards to finance, negative amortization occurs when the underlying loan payment for any period is less than the interest charged over that particular period. When this relationship takes place, the outstanding balance of the overall loan increases; the payment offered by the borrower isn’t enough to cover the interest payments so the principal is not affected and thus carries over the next installment.
The shorted amount in a negative amortization (the overall difference between the interest and the repayment schedule) is then added to the total amount owed to the underlying lender. This practice; however, must be agreed upon before the payment is shorted so as to avoid a total default on the loan obligation.
Negative amortization is typically used during an introductory period, before any loan payments may exceed the interest and the loan itself becomes self-amortizing.
Negative amortization occurs only in loans in which the periodic payments do not cover the amount of interest due for that specific loan period. The unpaid interest then compounds and is capitalized monthly into the overall remaining balance of the loan. As a result, the loan balance or principal increases by the amount of the unpaid interest and is divided on a monthly basis. The purpose of this feature is not to increase overall affordability, but to spark advanced cash management and simplify payment flexibility.
Negative amortization also contains a recast period and a recast principal balance cap based on particular state legislation. The recast period tied into negative amortization is typically 60 months or 5 years while the recast principal balance cap is usually up to a 25% increase of the loan balance over the original loan amount. Particular states and lenders may offer products with smaller recast periods and principal balance caps, but may not issue amortization loans that exceed their particular legislated requirements under the penalty of law.

Negative Amortization Circumstances:
All negative amortization home loans will eventually require the full repayment of the interest and principal according to the original terms of the mortgage agreement signed by the borrower. The majority of mortgages or long-term loans will only allow for negative amortization for no more than 5 years; all loans will have terms to recast the payment to a fully functional amortizing schedule if the borrower’s principal exceeds a specified amount.
A negative amortization often occurs when the loan is constructed in high cost areas because the monthly payments will be lower than other types of financing instruments.
A negative amortization loan can be viewed as high risk because these loans are typically safer in a falling rate market and riskier in a rising rate market. 

2 Questions about Equity

2 Questions about EquityWhat is Equity?

The term ‘equity’ refers to interest or the residual claim of a class of investors in assets once all liabilities have been fulfilled.

Equity can be described in the case of home ownership. When an individual purchases a home, they typically finance their purchase with a mortgage. The mortgage, which in essence is a loan offered by a bank or a similar lending institution, represents the percentage ownership of the lender. As the mortgage is paid off, the individual assumes a coordinating percentage ownership of the home. This percentage ownership is referred to as equity. In an accounting context, shareholders’ equity represents the remaining interest in the underlying assets of a company, which is spread among individual shareholders of either common or preferred stock.
In regards to business ownership, an owner (at the starting point of their business operation) will finance the model through financing. This financing creates a liability on the business in the form of capital as the business is a separate legal entity from its ownership. Once the liabilities have been accounted for, the remaining positive balance is regarded as the owner’s interest or equity in the business.
Understanding equity is crucial when evaluating and comprehending the liquidation process of bankruptcy. During its first stage, all of the secured creditors are paid against the proceeds obtained from the assets present. Subsequently, a series of creditors (which are ranked in priority sequence) have the following claim on the residual proceeds. Ownership equity is the last residual claim against the present assets, which are paid only after all of the other creditors are satisfied. In cases where even the creditors could not be reimbursed, nothing is left over to satisfy the owners’ equity. As a result, the owners’ equity is reduced to 0.

What are Equity Investments?
An equity investment refers to the process of buying and holding shares of stocks listed on a market by corporations or individual firms that distribute dividends and capital gains.
An equity investment may also refer to the acquisition of ownership (equity) in a private or Startup Company. When an investment is made in such novel companies, it is referred to as a venture capital investment and is generally regarded as a higher risk investment strategy.
The equities obtained by private investors are often held by mutual funds or other investment companies, many of which are quoted on major exchanges or publications. Such investment strategies enable investors to obtain a mitigated risk through the diversification of various securities. Additionally, such investment companies are run and handled by professional fund managers. An alternative equity investment is employed by private investors and pension funds, where the equities are held directly.
When the owners of equity take the form of shareholders, the interest is typically called shareholders’ equity. In the stock market, the market price per share is not directly related to the equity per share as calculated and offered in accounting statements. Therefore, stock valuations, are often higher and are based on alternative considerations that relate to the business’ operating cash flow, future prospects and profits.

FOREX Market Defined

FOREX Market DefinedWhat is the FOREX Market?

The FOREX Market is the financial realm in which the trade and exchange of foreign currency systems takes place; the purchase(s) or sales of specific currency systems undertaken by individuals are conducted with regard to the fluctuation of respective fluctuation experienced by tradable and exchangeable currency – although its technical name is the ‘Foreign Exchange Market’, a multitude of traders is commonly refer to it as the FOREX Market.

What is the Virtual FOREX Market?



Although the FOREX Market was conceived with regard to a physical setting – prior the advent of applicable technology, the virtual FOREX market was constructed for online and digital use; akin to the physical FOREX Market, the virtual FOREX Market operates with regard to the dynamic of exchange rates, including:
The engagement in the trade and exchange of International currency is exchanged between individuals interested in the monitoring of the behavior of that currency.
The ability to utilize electronic resources in order to investigate the wide variety of observable trends and patterns with regard to the valuation of foreign currency and exchange.

How Does the FOREX Market Work?

Currency Exchange is the process of exchanging – or trading – one type of currency for another. The process of the determination of value with regard to Currency Exchange is a dynamic that varies; the fluctuation of Currency Exchange rates may be dependent on a variety of features:
FOREX Market provides a setting in which the valuation of different currency and monetary systems are subject to fluctuation, which typically illustrates a variance in trends or behaviors in which circulated currency belonging to an individual country or nation may result in a multitude of results.
Although the valuation of certain currency may render financial gain with regard to FOREX Market, currency experiencing severe decreases in valuation may render financial loss upon the decline of currency rates.
FOREX Brokers are financial professionals who participate in the exchange of currency systems within the realm of the FOREX Market, including the analysis of exchange rates, monetary systems, economics, and financial circulationanalysis of currency exchange rates.

FOREX Market Legality

FOREX Market is a highly-specialized financial setting, which is subject to all expressed and applicable legality latent within activities rooted in financial exchanges. Many of both the crimes, as well as the legal statutes implicit within the stock market and investments are applicable to FOREX Market operations:
FOREX Market operations will be subject to any or all financial investigations undertaken by the presiding government of the country or nation; these investigations may take place on a variety of levels with regard to applicable legislature and legal statutes – although the setting of crime may vary, punitive recourse may not.
Individuals interested in engaging in FOREX Market ventures and operations are encouraged to consult with legal professionals specializing in finance and international law; a legal background of this type will allow clientele to be privy to any or all implicit statutes and legal procedures latent within commercial ventures existing on an international level.
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