Why Does Larry Page Pay Himself a $1 Salary?

July 7, 2024 No Comments

A: Co-founder and current chief executive officer (CEO) of Google Larry Page has been paid an annual salary of only $1 every year since the company went public. Though the practice of limiting the top executive’s salary is not widespread, Page is not alone. His

What is a stock-for-stock merger and how does this corporate action affect existing shareholders?

July 7, 2024 No Comments

A: First, let’s be clear about what we mean by a stock-for-stock merger. When a merger or acquisition is conducted, there are various ways the acquiring company can pay for the assets it will receive. The acquirer can pay cash outright for all the equity

What is a trailing commission?

July 7, 2024 No Comments

A: Very simply, a trailing commission is money you pay an advisor each year that you own an investment. The purpose of the fee is to provide incentive for the advisor to review his clients’ holdings and to provide advice. But when it comes down

What is real estate underwriting?

July 7, 2024 No Comments

A: When an individual or business entity seeks funding for a real estate project or purchase, the loan request is scrutinized by an underwriter to determine how much risk the lender is willing to accept. These types of underwriters are not to be confused with securities

What is the difference between a president and a CEO?

July 7, 2024 No Comments

A: In general, the chief executive officer (CEO) is considered the highest ranking officer in a company and the president is second in charge. However, in corporate governance and structure, many permutations can take place, so the roles of both CEO and president may be

What is the difference between a principle agent problem and moral hazard?

July 7, 2024 No Comments

A: Principal-agent problems and moral hazards are related in that one gives rise to the other. Principal-agent problems occur when the principal of an entity hires on a company or individual employee to complete designated tasks that have a tendency to solely benefit the principal

What is the difference between an IPO and a seasoned issue?

July 7, 2024 No Comments

A: When a privately owned organization decides to raise capital by offering shares of stock or debt securities to the public for the first time, it conducts an initial public offering (IPO), at which point it becomes a publicly traded company. When an existing publicly

What is the difference between investment banks and merchant banks?

July 7, 2024 No Comments

A: Merchant banks and investment banks, in their purest forms, are different kinds of financial institutions that perform different services. In practice, the fine lines that separate the functions of merchant banks and investment banks tend to blur. Traditional merchant banks often expand into the

What economic indicators are important for investing in the automotive sector?

July 7, 2024 No Comments

A: The most important economic indicators for investing in the automotive sector are auto sales, the unemployment rate, consumer confidence and interest rates. Auto sales are the most important indicator for the automotive sector. More auto sales lead to increased sales and earnings for automakers,

What incentives does an employer have in offering fringe benefits?

July 7, 2024 No Comments

A: More often than not, employers offer employees benefits above and beyond an agreed-upon wage or salary. In addition to a paycheck, employees receive compensation by way of fringe benefits. These company perks can include group life, health and disability insurance options; dependent care; tuition

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