What are the major characteristics of a general partnership? A general partnership is the most basic form of business entity. The primary characteristics of the general partnership are as follows:  Forming a General Partnership - Creation & Maintenance A general partnership is an agreement between two or more persons to share a common interest i...

What is a Substitution Swap? Substitution swap is the act of trading security with another security that has similar features and highly rated yields. In this case a money manager exchanges one bond for another that has similar terms of the coupon, credit quality, and maturity as well as offers higher yields. The substitution swap allows investors t...

What are Externalities? An externality is any positive or negative outcome of an economic activity that affects the population or surrounding environment that is not an intended or suspected effect or result.  Externalities often occur when business activities affect those who are not related to production or consumption of goods and services.  What...

What is the Culture Types Model?  The Culture Types Model, by Deal and Kennedy (1982), identifies four corporate culture types characterized by Feedback Speeds and Degree of Risk. Components of Corporate Culture?  Deal and Kennedy argue corporate culture is based on an interlocking of six components:  history,  values and beliefs,  rituals and cerem...

What is the Buying Power Index? The Buying Power Index is a tool used by retailers to assess the purchase power or buying power of a region over another. When retailers have the opportunity of selling their products in different locations, before selecting which location is most profitable, they use the buying power index. This will help determine t...

Why are Kickbacks a Bad Thing? In essence, a kickback is a bribe. It's a way of paying money to get somebody to keep doing business with you. From a basic standpoint, you shouldn't have to do that. If you have the best product, you shouldn't have to pay people to buy it. So, that's a problem with kickbacks, Around that same idea, kickbacks are not o...

What is Laddering? Laddering refers to promoting inflated pre-IPO prices in order to obtain a greater offering allotment. Laddering is an illicit IPO practice where the underwriter sells IPO shares to clients with an implicit agreement that more shares would be purchased post IPO, resulting in huge profits for both parties. Once the price rises to a...

What is a Banker's Blanket Bond? Banker's blanket bond (BBB) refers to a fidelity bond bought from an insurance broker which safeguards a bank from losses from a wide range of criminal acts executed by employees. Certain states request the condition of a blanket bond coverage before a bank can operate. Back to:BANKING, LENDING, & CREDIT INDUSTRY...

What is Converting a business entity to an LLC? Converting from one business entity to another varies in complexity based upon the original type of entity.  The first step is forming a new LLC. Forming an LLC as a sole proprietorship is extremely simple.  Next, the assets of the sole proprietorship simply need to be transferred to the new LLC entity...

What are the Defenses to a Defamation Action? There are several recognized defenses to a defamation claim.  First, if the allegedly defamatory statement is true, it is an absolute defense.  Second, a communication may be privileged under the law and specifically exempted from defamation actions. Example: In most circumstances, statements made by leg...