What Is a Dynamic Gap? The dynamic gap is a way to measure the gap between a bank’s current assets and liabilities. The gap is always in the process of expanding and contracting due to deposits being made and redeemed. The dynamic gap attempts to account for the fluctuating nature of the gap. Key Takeaways
What Is a Dynasty Trust? A dynasty trust is a long-term trust created to pass wealth from generation to generation without incurring transfer taxes—such as the gift tax, estate tax, or generation-skipping transfer tax (GSTT)—for as long as assets remain in the trust. The dynasty trust’s defining characteristic is its duration. If properly designed, it can
What is a Deferred Gain on Sale of Home? Deferred Gain on Sale of Home, repealed in 1997, was a tax law allowing homeowners to defer recognition of capital gains from the sale of a principal residence. Proceeds from the sale had to be used within two years to purchase a new principal residence of
What is Double Exempt? Double exempt refers to the tax status of a security, such as a municipal bond, where the coupon payments are not subject to both federal and state income taxation. Key Takeaways Specifically, the term double exempt refers to the tax benefit which allows the interest earned from bonds to be free from
What Is a Drawback? A drawback is a rebate on taxes or tariffs paid by businesses on goods that were imported into the United States and then exported out again, such as on raw materials being imported for use in production, and the final goods then being exported. This lessens the tax burden on companies
What Was E? “E” was a temporary character suffix added to stock symbols traded on the Nasdaq exchange, which indicated that the issuer of the stock was delinquent in regulatory filings. The “E” suffix was only used for Over-the-Counter Bulletin Board (OTCBB) issues. The Nasdaq replaced the “E” suffix with the Financial Status Indicator (FSI) in
What Is the Equivalent Annual Cost (EAC)? Equivalent annual cost (EAC) is the annual cost of owning, operating, and maintaining an asset over its entire life. Firms often use EAC for capital budgeting decisions, as it allows a company to compare the cost-effectiveness of various assets with unequal lifespans. Equivalent Annual Cost (EAC) Understanding the
What Is Europe, Australasia, Far East (EAFE)? Europe, Australasia, and the Far East are the most developed geographical areas of the world outside the United States and Canada. These regions are commonly referred to by the acronym EAFE, and many different exchange-traded funds (ETFs) and mutual funds focus their efforts on investing in companies in
What Is an Early Withdrawal? The term early withdrawal refers to the removal of funds from a fixed-term investment prior to the allowed date. Early withdrawals can be made from investment vehicles, such as annuities, certificates of deposit (CDs), or qualified retirement accounts, before the maturity date. Doing so can result in fees and penalties
What Is Earned Income? Earned income is money received as pay for work performed, such as wages, salaries, bonuses, commissions, tips, and net earnings from self-employment. It can also include long-term disability, union strike benefits, and, in some cases, payments from certain deferred retirement compensation arrangements. Earned income can be contrasted with unearned income, also
