Corporate Refinancing

What Does it Mean?
The process through which a company reorganizes its debt obligations by replacing or restructuring existing debts. Refinancing may also involve issuing equity to pay off a percentage of debt.

Debt is replaced or refunded by a company with money that is raised by issuing or creating other borrowing. In restructuring, a company works with its creditor to change the terms of a loan; these terms can include the reduction of interest rates, the improvement of covenants or the extension of the loan's terms.

For investor...

It is the process through which a company reorganizes its debt obligations by replacing or restructuring existing debts. Refinancing may also involve issuing equity to pay off a percentage of debt.

Debt is replaced or refunded by a company with money that is raised by issuing or creating other borrowing. In restructuring, a company works with its creditor to change the terms of a loan; these terms can include the reduction of interest rates, the improvement of covenants or the extension of the loan's terms.

Corporate refinancing will often come about if a company is unable to meet its current obligations and needs to restructure the terms of its existing debt arrangement. This usually involves lowering the interest rate and extending the time to maturity. This happens most often when a company is near bankruptcy or is in Chapter 11 bankruptcy.

Refinancing will also occur when interest rates have fallen in the market, as the lower current market rates allows a company to cut down on the overall costs of debt a company faces. One way a company can achieve this is by calling its redeemable or callable bonds, then reissuing them at a lower rate of interest.

Retired Tax Attorney Rveal Proven Strategies e

Looking at the facts, it's hard to believe otherwise. Doing business is just going to get more costly. A trillion dollar mortgage bail-out bill has passed and Congress wants to force businesses to provide health insurance to their employees or face tax penalties. Not to mention the minimum wage increases and soaring gas and energy prices.

We are undoubtedly in the middle of an enormous financial crisis with no end in sight. In addition to the growing financial crisis, we are on the verge of the largest set of tax increases in our nation's history. Business owners face increases in almost every tax imaginable. Increases to the capital gains tax, taxes on dividends and even increased taxes on energy.

Many businesses are struggling without these insane tax increases. You can practically watch your tax bill creeping higher and higher with every passing day. It's like a teenager with a no-limit credit card. First, it'll be "just for emergencies". And before you know it, someone's knocking on your door looking for money. Someone has to pay and it's going to be you!

All the while, you're trying to save money to fund your childrens' college, secure your retirement and simply try to make ends meet.

CBOE Volatility Index

What Does it Mean?

The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge".

For Investor....

There are three variations of volatility indexes: the VIX tracks the S&P 500, the VXN tracks the Nasdaq 100 and the VXD tracks the Dow Jones Industrial Average.

The first VIX, introduced by the CBOE in 1993, was a weighted measure of the implied volatility of eight S&P 100 at-the-money put and call options. Ten years later, it expanded to use options based on a broader index, the S&P 500, which allows for a more accurate view of investors' expectations on future market volatility. VIX values greater than 30 are generally associated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally correspond to less stressful, even complacent, times in the markets.

We tell you about Canadian income trusts

There is a host of income-producing investment options in the market, but few instruments available to the regular investor produce the sort of yields often seen in Canadian income trusts. It is not rare to see yields on these units in excess of 10%, and they typically pay distributions monthly. But they are structured differently from regular corporations (they are trusts, after all), and investors need to recognize and understand what those differences mean for their investment portfolios.

What Are Canadian Income Trusts?
This particular type of investment vehicle goes by several names: Canadian income trust, Canadian royalty trust, or the more colloquial "CanRoy." Whatever name they go by, CanRoys are all corporate trust structures set up to direct royalties or income to trust holders. By legally bypassing corporate taxation, the CanRoy structure allows for larger distributions than would be possible through a normal tax-paying corporate structure.

CanRoys have proved to be a popular corporate structure in Canada, as roughly 10% of the companies on the Toronto Stock Exchange (TSX) are CanRoys. Of that number, roughly 40% (by market capitalization) are energy-related companies, while about two-thirds (by number) operate "regular businesses," which is not energy-related or REITs (as of 2008). (Read about the tax implications of REITs in The Basics Of REIT Taxation.)

Are They Like American Trusts?
There are trusts organized under U.S. laws, but they are very different animals from their CanRoy cousins. American trusts are typically static in that they are not allowed to acquire new assets, nor are they actively managed. By contrast, CanRoys are living, changing, active businesses that are in many cases indistinguishable from regular tax-paying corporations in terms of how they run on a day-to-day basis. (Read more about the benefits of active management in Words From The Wise On Active Management.)

Account Reconcilement

What Does it Mean?

Account reconcilement is the process of confirming that two separate records of transactions in an account are equal. This can happen internally within a bank or broker, for example, as between general ledger entries and individual account records.

Reconciling also occurs when a customer of a bank or broker confirms that their personal records match what is reported on their periodic statements. Account reconcilement can also refer to balancing the books and records of a business with software programs and data entries.

For Investor....

Account reconciliation within financial institutions is a key regulatory and compliance function, and it is a primary focus for outside regulators in their routine audits of the firm. Customers of these firms should also keep an accurate record and report discrepancies promptly..

With the advent of computer systems to record transactions and client positions, reconciling often amounts to fixing small discrepancies of a few dollars, or even pennies, between one source and another. The longer an error goes uncovered, the more difficult it will be to reconcile the two records.