A yield curve is a graphical representation used to show the yield on bonds (of equal credit quality) over a range of maturity periods.
It plots bond yields (vertical axis) against maturities (horizontal axis).
Generally, longer maturities have higher yields than shorter maturities as investors want a higher return when they are taking longer term risks. This yield curve is usually upward sloping and gradually flattens out as maturities get longer.
However, the yield curve may be inverted when longer maturities have a lower yield than shorter maturities.
This indicates that an anticipated decrease in long-term interest rates over time is expected. Historically, the inverted yield curve has proven to be a reliable indicator of a recession.
The most widely used bond yield curve is for U.S. Treasuries. Its slope and shape measure investors’ feelings about risk and the direction of the economy.
Life insurance can help a family cope with financial hardships that result from the death of a breadwinner: pay off a mortgage, secure a college education, provide income for a surviving spouse and children, etc. Certain types provide living benefits as well: tax free dividends, tax free withdrawals, cash when you need it (be your own banker!) and supplemental retirement income on a tax advantaged basis.
For businesses, life insurance can secure loans, recover the economic loss created by the death of a key employee, secure the benefits provided by executive benefit plans, fund shareholder buyout agreements (including family buyouts), etc.
What Type of Life Insurance is Right for Me?
Life insurance comes in many flavors: Whole Life, Term, Universal Life, Variable Universal Life, and Indexed Universal Life.
Which one is right for you? I’m sure you’ve guessed the answer: “It depends.” On what? Your objectives, tolerance for risk, health and age, and family or business circumstances, to name a few.
Total Enterprise value, or TEV, is valuation metric that quantifies the total value of a company. TEV is often used when evaluating the overall economic worth of a business in the context of a sale or acquisition.
Whereas many public companies are measured on a market capitalization basis (total shares outstanding multiplied by the current stock price) that indicates just the equity value of an entity, TEV incorporates the value of both equity and debt, making it a more comprehensive measurement and comparative tool to evaluate companies with varying capital structures.
TEV is calculated by taking the equity value of a company and adding debt and preferred stock while subtracting cash.
Lastly, TEV is commonly paired with revenue and EBITDA data points to form the market multiplies ‘TEV/Revenue’ and ‘TEV/EBITDA.’ These multiples assist with relative valuation comparisons between companies.
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From the Journal
#Finterms: Bankruptcy vs. Insolvency
As most of us have heard in the news recently, some banks are being described as “going bankrupt”. Bankruptcies can come into play when individuals, businesses, or municipalities owe more than they own or is owed.
Wealth Management Services (“Investment Advisory”, “Financial Planning”, “Retirement Planning”, “Estate & Wealth Transfer Planning”, “Exit Planning”, “401(k) & 403(b) Advisory & Management”, “Qualified Plan Design & Consulting”) are offered through Baldwin & Clarke Advisory Services, LLC (BCAS). BCAS is a Registered Investment Adviser with the United States Securities and Exchange Commission (SEC). BCAS’ Form CRS and other disclosure documents can be found here. The information in this website has not been approved or verified by the SEC, or by any state securities authority. Additional information about BCAS is available on the SEC’s website at: www.adviserinfo.sec.gov, using CRD#105666. Registration does not imply a certain level of skill or training.
Investment Banking Services (“Pre-Transaction Planning”, “Business Valuations”, “Buy-Side & Sell-Side M&A Advisory”, “Debt & Equity Capital Advisory”) are offered through Baldwin & Clarke Corporate Finance, LLC.
Insurance Planning Services (“Life Insurance Planning”, “Disability Insurance Planning”, “Long-Term Care Insurance Planning”, “Shareholder Life Insurance Planning”, “Executive Benefit Planning”, “Key Person Insurance Planning”) are offered through Baldwin & Clarke, LLP.