What is the Venture Capital Exemption from the Investment Advisor's Act? Lots of regulations surround the sale of securities and management of other people’s money for the purpose of investing in securities. One of the most daunting rules governing the actions of individuals investing the funds of others is the Investment Advisor’s Act of 1940 (“Adv...

What is Discovery in a Civil Lawsuit? Discovery is the process of identifying and obtaining any information or evidence that is relevant and material to the dispute.  How is Discovery used in a Civil Trial? Discovery is the process of identifying and obtaining any information or evidence that is relevant and material to the dispute.  The rules of pr...

Broad-Based vs. Narrow-Based Weighted Averaged Calculation There are two primary variations of the weighted average formula depending on what constitutes common outstanding in the above formula. The first, and more common, is referred to as broad-based, weighted average while the second is referred to as narrow-based, weighted average.  The broad-ba...

What is a Catch-Up Contribution? A catch-up contribution is retirement savings contribution approved and regulated by the Internal Revenue Service (IRS). This retirement savings contribution is designed for individuals who are at least 50 years of age and have a 401(k) account, traditional IRA or Roth IRA. The 2001 Economic Growth and Tax Relief Rec...

What is Paid-In Capital? Paid-in capital, also known as contributed capital, is used to describe the amount of capital that investors have paid in during the issuance of either common or preferred stock. This process also includes the par value of different shares.  Paid-in capital is actually a fund that an organization raises by selling its capita...

What is a Captive Insurance Company? A Captive Insurance Company is a subsidiary company formed and owned by a company for managing the financial risks of the parent company. A Captive Insurance company insures the risks of its owner. It is a vehicle for self-insurance which is cost-effective and tax-effective. Captive Insurance companies are formed...

What is a Guarantee? A Guaranty/ Guarantee is a legally binding agreement in which a person (first party) agrees to be answerable for another person (second party), who wishes to obtain trust or credit from someone/institution (third party), and promises to fulfill the specified obligation of the other person (Second party) in case of default.  What...

What is Carried Interest? Carried Interest (or carry) is the share of the earnings that the general owners of hedge funds and private equity funds get as compensation when the funds investments are profitable. This compensation method is intended to motivate the general partner (fund manager) to work on improving the fund's performance. How Does Car...

What is a Straddle in Options Trading? A straddle is an options trading strategy. A trader buys/sells the Call and Put options for the same underlying asset simultaneously at a certain point in time to use a straddle, provided both options have the same expiry date and strike price. If the price movement is not clear, a trader joins such a neutral t...

What is Data On-Boarding? The term Data On-Boarding is referred to as the transfer process of offline data in the form of digital format. The data is then combined and used for analysis purpose. Data onboarding is used for marketing purposes, to know marketing needs such as sales and overall consumers trends and information (behavioral analytics). O...