What Is Stranger-Owned Life Insurance? Stranger-owned life insurance (STOLI) is an arrangement in which an investor holds a life insurance policy without insurable interest on the insured. Without insurable interest, the investor would ordinarily be prohibited from purchasing the original policy. Because of this, STOLI policies are generally illegal and difficult to obtain. Key Takeaways
What Is a Strangle? A strangle is an options strategy in which the investor holds a position in both a call and a put option with different strike prices, but with the same expiration date and underlying asset. A strangle is a good strategy if you think the underlying security will experience a large price
What Is a Strategic Alliance? A strategic alliance is an arrangement between two companies to undertake a mutually beneficial project while each retains its independence. The agreement is less complex and less binding than a joint venture, in which two businesses pool resources to create a separate business entity. A company may enter into a
What Is Strategic Asset Allocation? Strategic asset allocation is a portfolio strategy. The investor sets target allocations for various asset classes and rebalances the portfolio periodically. The portfolio is rebalanced to the original allocations when they deviate significantly from the initial settings due to differing returns from the various assets. Key Takeaways: Strategic asset allocation
What Is a Strategic Buyer? A strategic buyer is a company that acquires another company in the same industry to capture synergies. The strategic buyer believes that the two companies combined will be greater than the sum of their separate individual parts and aims to integrate the purchased entity for long-term value creation. Because a strategic buyer expects
What Is a Strategic Default? A strategic default is a deliberate decision by a borrower to stop making payments on a debt. The decision is made by the debtor, not the lender. The strategic default option is sometimes chosen by mortgage holders of residential or commercial property who have analyzed the costs and benefits of
What Is Strategic Gap Analysis? Strategic gap analysis is a business management technique that requires an evaluation of the difference between a business endeavor’s best possible outcome and the actual outcome. It includes recommendations on steps that can be taken to close the gap. Strategic gap analysis aims to determine what specific steps a company
What Is Strategic Management? Strategic management is the management of an organization’s resources to achieve its goals and objectives. Strategic management involves setting objectives, analyzing the competitive environment, analyzing the internal organization, evaluating strategies, and ensuring that management rolls out the strategies across the organization. Key Takeaways Companies, universities, nonprofits, and other organizations can use
What Is a Stretch Annuity? A stretch annuity (also known as a legacy annuity) is an annuity option where tax-deferred allowances are passed on to the beneficiaries, offering them more flexibility and control over maintaining the investment. The beneficiary thus has fewer restraints on wealth transfer, and he or she is able to receive a
What Is or Was a Stretch IRA? The stretch IRA was an estate planning strategy that formerly allowed owners of Individual Retirement Accounts (IRAs) to pass along the assets in the account from one generation to the next while taking advantage of prolonged tax-deferred growth of the assets. The strategy was essentially disallowed in 2019
