Terms 1 Flashcards
What is an Annuity Contract?
A written agreement between you and an insurance company where you make payments in return for a series of regular payments, designed to provide a steady stream of income, often during retirement.
Annuity contracts can be immediate or deferred.
Define Premiums in the context of bonds.
The amount by which the market price of a bond exceeds its face value, typically arising when the bond’s stated interest rate is higher than prevailing market interest rates.
This makes the bond more attractive to investors.
What are Custodial Accounts?
Financial accounts managed by an adult for the benefit of a minor until the minor reaches the age of majority.
The minor gains control of the assets at that point.
What are Rural Cooperatives?
User-owned, user-controlled businesses that operate for the benefit of their members, often in rural areas, addressing needs like agriculture and utilities.
They can provide various services to the local community.
What does Vesting mean in employment?
The situation in which an employee gains ownership of retirement funds or stock options after a certain period of time.
The vesting schedule indicates how long employees must remain with their employer to earn these rights.
Define Fiduciary.
Involving trust, especially regarding the relationship between a trustee and a beneficiary.
An example is a company’s fiduciary duty to its shareholders.
Who is a Trustee?
A person responsible for managing and administering the assets held within a trust according to the trust document’s instructions.
Trustees have a legal obligation to act in the best interest of the beneficiaries.
What is a Trust?
A fiduciary arrangement allowing a trustee to hold assets on behalf of a beneficiary or beneficiaries.
Trusts can specify how and when assets pass to beneficiaries.
What is a Conduit in finance?
A mechanism or entity that facilitates the flow of funds for public benefit projects, often involving a governmental entity issuing bonds to raise capital for private projects.
This helps finance initiatives that might not be possible otherwise.
Who are Highly Compensated Employees?
Employees who either own more than 5% of the company, received compensation exceeding a certain threshold in the previous year, or are in the top 20% of employees by compensation.
This classification affects various benefits and compliance requirements.
