2. What do u understand from Spring Loading An option-granting practice in which options are granted at a time that precedes a positive news event. Spring loading relies on the fact that positive news typically causes the underlying company's stock to surge in value. Timing an option grant to precede the public news release provides the option holder with an almost instant profit
3. Explain Commodity swap A swap in which exchanged cash flows are dependent on the price of an underlying commodity. A commodity swap is usually used to hedge against the price of a commodity
4. Define Love Money Seed money or capital given by family or friends to an entrepreneur to start a business. The decision to lend money and the terms of the agreement are usually based on qualitative factors and the relationship between the two parties, rather than on a formulaic risk analysis.
5. Define Hobby Loss A non-deductible loss incurred as a result of doing an activity for personal pleasure instead of for profit. A taxpayer cannot deduct the hobby loss as a business loss. A "hobby loss rule" is used to determine whether an activity is a hobby or a business.
6. What do u understand from a Cafeteria Plan / Flexible benefit plan An employee benefit plan that allows staff to choose from a variety of benefits to formulate a plan that best suits their needs. Cafeteria plan options may include health and accident insurance, cash benefits, tax advantages and/or retirement plan contributions
7. What do u understand from Sin tax A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. These type of taxes are levied by governments to discourage individuals from partaking in such activities without making the use of the products illegal. These taxes also provide a source of government revenue
8. Define Crack spread The spread created in commodity markets by purchasing oil futures and offsetting the position by selling gasoline and heating oil futures. This investment alignment allows the investor to hedge against risk due to the offsetting nature of the securities.
9. Define transfer tax Any kind of tax that is levied on the transfer of official documents or other property. Transfer tax is paid by the seller of the property. Gift and estate taxes are both transfer taxes
10. Define surrender period The amount of time an investor must wait until he or she can withdraw funds from an annuity without facing a penalty. Withdrawing money before the agreed-upon holding period can result in a surrender charge.