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Financial Terms | |
Tontine |
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Definition of TontineTontineA type of life insurance or annuity first introduced by Lorenzo Tonti, a Neopolitan banker, in France in the 17th century. It consisted of a fund to which a group of persons contribute, the benefits ultimately accruing to the last survivor or to those surviving after a specified time, in equal shares. The only insurance plans available today which we are aware of that display characteristics of a tontine are some children's Registered Educational Savings Plans (RESP's). These plans generally stipulate that if the child who is covered under the plan does not use the accumulated savings to attend an accredited university, then only the principal invested is returned. All growth in the plan is held to be distributed to other plan holders who do go on to attend university.
Related Terms:12b-1 fundsMutual funds that do not charge an upfront or back-end commission, but instead take out up to 401k PlanA retirement plan set up by an employer, into which employees can 403b PlanA retirement plan similar to a 401k plan, except that it is designed Abandonment optionThe option of terminating an investment earlier than originAlly planned. Acceleration ClauseClause causing repayment of a debt, if specified events occur or are not met. Accidental Dismemberment: (Credit Insurance)Provides additional financial security should an insured person be dismembered or lose the use of a limb as the result of an accident. Accumulated Benefit Obligation (ABO)An approximate measure of the liability of a plan in the event of a ![]() Accumulated depreciationA contra-fixed asset account representing the portion of the cost of a fixed asset that has been previously charged to expense. Each fixed asset account will have its own associated accumulated depreciation account. accumulated depreciationA contra, or offset, account that is coupled Accumulated depreciationThe sum total of All deprecation expense recognized to date Accumulated Other Comprehensive IncomeCumulative gains or losses reported in shareholders' Accumulated ValueAn amount of money invested plus the interest earned on that money. acid test ratio (also called the quick ratio)The sum of cash, accounts receivable, and short-term marketable Act of state doctrineThis doctrine says that a nation is sovereign within its own borders and its domestic ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. After-tax profit marginThe ratio of net income to net sales. ![]() After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. Aggregate planningA budgeting process using summary-level information to algorithma logical step-by-step problem-solving technique All equity rateThe discount rate that reflects only the business risks of a project and abstracts from the All-in costTotal costs, explicit and implicit. All or noneRequirement that none of an order be executed unless All of it can be executed at the specified price. All-or-none underwritingAn arrangement whereby a security issue is canceled if the underwriter is unable allocateassign based on the use of a cost driver, a cost predictor, allocationthe systematic assignment of an amount to a recipient AllocationThe process of storing costs in one account and shifting them to other Allocation base A measure of activity or volume such as labourhours, machine hours or volume of production Allowance for bad debtsAn offset to the accounts receivable balance, against which Allowance for doubtful accountsA contra account related to accounts receivable that represents the amounts that the company expects will not be collected. Allowance for Doubtful AccountsAn estimate of the uncollectible portion of accounts receivable Allowance methodA method of adjusting accounts receivable to the amount that is expected to be collected based on company experience. American sharesSecurities certificates issued in the U.S. by a transfer agent acting on behalf of the foreign Amortization (Credit Insurance)Refers to the reduction of debt by regular payments of interest and principal in order to pay off a loan by maturity. Annual fund operating expensesFor investment companies, the management fee and "other expenses," AnnuityA regular periodic payment made by an insurance company to a policyholder for a specified period AnnuityA series of payments or deposits of equal size spaced evenly over AnnuityA series of payments over a period of time. The payments are usuAlly annuityequally spaced level stream of cash flows. AnnuityA contract which provides an income for a specified period of time, such as a certain number of years or for life. An annuity is like a life insurance policy in reverse. The purchaser gives the life insurance company a lump sum of money and the life insurance company pays the purchaser a regular income, usuAlly monthly. AnnuityPeriodic payments made to an individual under the terms of the policy. Annuity dueAn annuity with n payments, wherein the first payment is made at time t = 0 and the last Annuity Dueannuity where the payments are to be made at the beginning of annuity duea series of equal cash flows being received or paid at the beginning of a period annuity dueLevel stream of cash flows starting immediately. Annuity factorPresent value of $1 paid for each of t periods. annuity factorPresent value of an annuity of $1 per period. Annuity in arrearsAn annuity with a first payment on full period hence, rather than immediately. Annuity PeriodThe time between each payment under an annuity. approximated net realizable value at split-off allocationa method of Allocating joint cost to joint products using a Asset allocation decisionThe decision regarding how an institution's funds should be distributed among the Authorized sharesNumber of shares authorized for issuance by a firm's corporate charter. Authorized sharesThe number of shares of stock that the company is legAlly authorized to sell. Automated Clearing House (ACH)A collection of 32 regional electronic interbank networks used to Automated Clearing House (ACH)A banking clearinghouse that processes direct Automatic Benefits PaymentAutomatic payment of moneys derived from a benefit. Available-for-Sale SecurityA debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period. Average lifeAlso referred to as the weighted-average life (WAL). The average number of years that each Back To Back AnnuityThis term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usuAlly whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of All types of annuities, along with a guaranteed life insurance policy Allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application. Baker PlanA plan by U.S. Treasury Secretary James Baker under which 15 principal middle-income debtor Balanced fundAn investment company that invests in stocks and bonds. The same as a balanced mutual fund. Balanced mutual fundThis is a fund that buys common stock, preferred stock and bonds. The same as a Balloon maturityAny large principal payment due at maturity for a bond or loan with or without a a sinking Banker's acceptanceA short-term credit investment created by a non-financial firm and guaranteed by a Bankers AcceptancesA bill of exchange, or draft, drawn by the borrower for payment on a specified date, and accepted by a chartered bank. Upon acceptance, the bill becomes, in effect, a postdated certified cheque. Basic Earnings Power RatioPercentage of earnings relative to total assets; indication of how BellwetherA signAlling device. Bellwether issuesRelated:Benchmark issues. Beneficiary (Credit Insurance)The person or party designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event. In the case of credit insurance, the beneficiary will always be the creditor. benefits-provided rankinga listing of service departments in an order that begins with the one providing the most service Beta equation (Mutual Funds)The beta of a fund is determined as follows: Beta (Mutual Funds)The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means Block houseBrokerage firms that help to find potential buyers or sellers of large block trades. Borrower (Credit Insurance)A consumer who borrows money from a lender. Borrower falloutIn the mortgage pipeline, the risk that prospective borrowers of loans committed to be Break-even timeRelated: Premium payback period. Builder buydown loanA mortgage loan on newly developed property that the builder subsidizes during the Bulldog bondForeign bond issue made in London. Bulldog marketThe foreign market in the United Kingdom. BuydownsMortgages in which monthly payments consist of principal and interest, with portions of These Cafeteria PlanA flexible benefits plan authorized under the Internal Revenue cafeteria plan a “menu” of fringe benefit options that includecash or nontaxable benefits CallAn option that gives the right to buy the underlying futures contract. Call a. An option to buy a certain quantity of a stock or commodity for a Call an optionTo exercise a cAll option. Call dateA date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond Call money rateAlso cAlled the broker loan rate , the interest rate that banks charge brokers to finance Call optionAn option contract that gives its holder the right (but not the obligation) to purchase a specified Call OptionA contract that gives the holder the right to buy an asset for a call optionRight to buy an asset at a specified exercise price on or before the exercise date. Call priceThe price, specified at issuance, at which the issuer of a bond may retire part of the bond at a Call priceThe price for which a bond can be repaid before maturity under a cAll provision. Call protectionA feature of some cAllable bonds that establishes an initial period when the bonds may not be Call provisionAn embedded option granting a bond issuer the right to buy back All or part of the issue prior Call riskThe combination of cash flow uncertainty and reinvestment risk introduced by a cAll provision. Call swaptionA swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The CallableA financial security such as a bond with a cAll option attached to it, i.e., the issuer has the right to Callable bondA bond that Allows the issuer to buy back the bond at a callable bondBond that may be repurchased by the issuer before maturity at specified cAll price. Canada Pension Plan (CPP)A plan that provides retirement and long term disability income benefits to residents of Canadian provinces (excluding Quebec). Canada Savings BondsA bond issued each year by the federal government. These bonds can be cashed in at any time for their full face value. 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