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Facultative reinsurance is a form of reinsurance in which the terms, conditions, and reinsurance premium is individually negotiated between the insurer and the reinsurer. There is no obligation on the reinsurer to accept the risk or on the insurer to reinsure it if it is not considered necessary. The main differences between facultative reinsurance and coinsurance is that the policyholder has no indication that reinsurance has been arranged. In coinsurance, the coinsurers and the proportion of the risk they are covering are shown on the policy schedule. Also, coinsurance involves the splitting of the premium charged to the policyholder between the coinsurers, whereas the reinsurers charge entirely separate reinsurance premiums.
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The farthing was an English coin. It was one quarter of a penny. It was a silver coin from the reign of Edward I to that of Mary, no farthings being issued during the reign of Elizabeth I. The copper farthing was introduced by James I in 1613, and the bronze farthing in 1860. Between 1842 and 1869 half-fathings were also coined.
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The federal funding rate is the rate of interest charged by the US Federal Reserve System when lending money to the rest of the banking system.
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The Federal Reserve System is the banking system in the USA that performs the functions of a central bank. The system consists of twelve Federal Reserve Districts, in each of which a Federal Reserve Bank acts as lender of last resort. The activities of the twelve Reserve Banks are controlled from Washington by the Federal Reserve Board. The Federal Reserve System is used to implement the USA's monetary policy.
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The Financial Times Share Indexes are a number of share indexes published by the Financial Times, daily except Sundays and Mondays, as a barometer of share prices on the London Stock Exchange. The Financial Times Actuaries Share Indexes, of which there are 54, are calculated by the Institute of Actuaries as weighted arithmetic averages for various sectors of the market (capital goods, consumer goods, etc.) and divided into various industries. These are used widely by investors, portfolio managers, etc. The Financial Times Ordinary Share Index represents the movement of industrial shares on the basis of 30 market leaders. An unweighted geometric average, it is published twice daily (noon and the close of business) and gives an indication of market mood. The more recent Financial Times Stock Exchange 100 Index (FTSE 100 Index, known as FOOTSIE) is based on the price of 100 securities and gives the best overall indication of market movements on a daily basis.
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A financing gap is the difference between a country's foreign exchange requirements, for imports and the servicing of its debts, and what it has available from export receipts and overseas earnings. This gap must be filled either by raising further foreign exchange (donor aid, loans, etc.) or by cutting back the requirements, either by reducing imports or rescheduling the repayment of debts. Forecasting the financing gap and negotiating means of bridging it are major elements in helping countries with balance of payments problems.
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A fine trade bill is a bill of exchange that is acceptable to the Bank of England as security, when acting as lender of last resort. It will be backed by a first-class bank or finance house.
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A first-loss policy is a property insurance policy in which the policyholder arranges cover for an amount below the full value of the items insured and the insurer agrees not to penalize him for under-insurance. The main use of these policies is in circumstances in which a total loss is virtually impossible. For example, a large warehouse may contain œ2.5m worth of goods but the owner may feel that no more than œ500,000 worth could be stolen at any one time. The solution is a first- loss policy that deals with all claims up to œ500,000 but pays no more than this figure if more is stolen. First-loss policies differ from coinsurance agreements with the policyholders because the insured is not involved in claims below the first- loss level and the premiums are not calculated proportionately. In the above example, the premium might be as much as 80-90% of the premium on the full value.
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Fiscal drag is a restraint on the expansion of an economy as a consequence of government taxation policy. In a progressive tax system, a rise in inflation will cause wage earners to pay a higher proportion of their income in tax, even though their real wages are unchanged; this is nominal fiscal drag. Real fiscal drag occurs when all taxpayers pay a higher proportion of their income in taxation, as a result of rising real wages. In these circumstances there is a rise in government tax revenues as a proportion of gross domestic product. The most widely advocated remedy for fiscal drag is the indexation of tax thresholds.
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Fiscal policy is the use of government spending to influence macroeconomic conditions. John Keynes advocated the encouragement of public works in order to create employment during recessions, arguing that fiscal policy would be more effective than monetary policy. Fiscal policy was actively pursued to sustain full employment in the post-war years; however, monetarists and others have claimed that this set off the inflation of the 1970s. In fact, they claim that every œ1 spent by a government crowds out œ1 spent by the private sector, leaving no real effect. Fiscal policy has remained 'tight' in most western countries in the 1980s, with governments actively attempting to reduce the level of public expenditure.
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The fiscal year is the year beginning on the 6th of April in one year and ending on the 5th of April in the next. Income tax, capital-gains tax, and annual allowances for inheritance tax are calculated for fiscal years, and the UK Budget estimates refer to the fiscal year. In the USA it runs from 1st of July to the following 30th of June. The fiscal year is sometimes called the tax year or the year of assessment.
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The Five-Cent Piece, or Half Dime was an American coin. Originally it was a silver coin first authorized in 1792, and coined the same year (original weight, 20.8 grains). In 1853 it was reduced to 19.2 grains. In 1873 it was discontinued. In 1866 the coinage of nickel five-cent pieces was authorized, the value remaining, as at first, one-twentieth of the standard dollar. The legal-tender value was, however, reduced from five dollars to thirty cents. There were no issues of half dimes during the years 1798, 1799, 1804, 1806 to 1828 inclusive. Some silver half dimes were the first coins struck by the US Mint in 1792.
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Five-twenties were American bonds bearing six per cent interest payable in gold, and redeemable at any time after five years from the date of issue, and payable in full at the end of twenty years. They were issued by the US Government in 1862, 1864 and 1865.
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In business, fixtures and fittings are items normally forming part of the setting in which an organization conducts its business, as distinct from the plant and machinery it uses in conducting the business.
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A fleet rating is a single special premium rate quoted by an insurer for covering the insurance on a number of ships or vehicles owned by one person or company, rather than considering each one individually. The fleet need not consist of identical vehicles or vessels but common ownership is essential. A common method of fleet rating is to examine the claims history of the fleet against the total premium. In this way one fleet member may have several claims (which would individually merit a premium adjustment) but if the rest of the fleet is claim-free no adjustment need be made. Insurers vary on the minimum number constituting a fleet.
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Flexitime or flexihours is a system of working, especially in offices, in which employees are given a degree of flexibility in the hours they work. Provided they work an agreed number of hours per day, they may start or finish work at different times. The object is usually to reduce time spent in rush-hour travelling.
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A floating charge is a charge over the assets of a company; it is not a legal charge over its fixed assets but floats over the charged assets until crystallized by some predetermined event. For example, a floating charge may be created over all the assets of a company, including its trading stock. The assets may be freely dealt with until a crystallizing event occurs, such as the company going into liquidation. Thereafter no further dealing may take place but the debt may be satisfied from the charged assets. Such a charge ranks in priority after legal charges and after preferred creditors in the event of a winding-up.
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A floating policy is an insurance policy that has only one sum insured although it may cover many items. No division of the total is shown on the policy and the policyholder is often able to add or remove items from the cover without reference to the insurers, provided that the total sum insured is not exceeded. Cover for contractors' plant and machinery is often arranged on this basis, because it enables them to purchase specialist equipment for a particular contract, without having to contact the insurers on every occasion.
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A floating warranty is a guarantee given by one person to another that induces this other person to enter into a contract with a third party. For example, a car dealer may induce a customer to enter into a hire-purchase contract with a finance company. If the car does not comply with the dealer' s guarantee, the customer may recover damages from the dealer, on the basis of the hire-purchase contract, even though the dealer is not a party to that contract.
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Floating-rate interest is an interest rate on certain bonds, certificates of deposit, etc., that changes with the market rate in a predetermined manner, usually in relation to the base rate.
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The florin was an English gold coin first minted by the statute of Edward III, containing one-fiftieth of a pound of gold and valued at six shillings. Half and quarter-florins were also minted, in proportion - a half-florin containg one hundreth of a pound of gold. The gold florins have long since been extinct.
The florin was an English, silver, two shilling coin first issued in 1849. It went out of production with the adoption of decimal currency. The florin was also used in Austria and in Holland, where it was also called a Guilder.
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Flotsam are goods or the debris of a shipwreck found floating upon the sea, which belong to the Crown unless claimed within a year and a day.
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A force majeure is an event outside the control of either party to a contract (such as a strike, riot, war, act of God) that may excuse either party from fulfilling his contractual obligations in certain circumstances, provided that the contract contains a force majeure clause. If one party invokes the force majeure clause the other may either accept that it is applicable or challenge the interpretation. In the latter case an arbitration would be involved.
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Foreclosure is the legal right of a lender of money if the borrower fails to repay the money or part of it on the due date. The lender must apply to a court to be permitted to sell the property that has been held as security for the debt. The court will order a new date for payment in an order called a foreclosure nisi. If the borrower again fails to pay, the lender may sell the property. This procedure can occur when a mortgagor fails to pay the mortgagee (bank, building society, etc.) his mortgage instalments, in which the security is the house in which the mortgagor lives. The bank, etc., then forecloses the mortgage, dispossessing the mortgagor.
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The forint is the currency of Hungary.
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Fractional banking is a banking practice that some governments impose on their banks, calling for a fixed fraction between cash reserves and total liabilities.
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Fractional currency was a term used to describe the bank notes of the USA which were of denominations of less than one dollar, some were even as low as three cents!
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The franc was the principle monetary unit of France and Belgium and is the principle monetary unit of Switzerland, Burundi, Cameroon, Rwanda and some other countries. The first French franc was struck, in gold, in 1360 and bore an impression of John II on horseback.
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Franked investment income are dividends and other distributions from British companies that are received by other companies. The principle of the imputation system of taxation is that once one company has paid corporation tax, any dividends it pays can pass through any number of other companies without carrying a further corporation-tax charge, hence the term 'franked'. Thus franked investment is exempt from corporation tax in the recipient company; moreover, the amount of tax credit included in the franked investment income can reduce the amount of advance corporation tax that the recipient company has to pay on its own dividends.
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A franked payment is a dividend or other distribution from a British company together with the amount of advance corporation tax attributable to the dividend. Thus, if the basic rate of income tax is 30%, a franked payment is the dividend actually paid plus 3/7 of it, i.e. it is a grossed-up dividend. In any accounting period advance corporation tax is actually paid on franked payments less franked investment income at the basic rate of income tax.
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Originally, franking was the right of sending letters free of charge. It was claimed for letters both sent and received by the House of Commons in 1660, and fully legalised in 1764 when all members of both Houses were allowed to send 10 and receive 15 letters a day gratis. The privilege was withdrawn on the introduction of the penny postage in 1840. Today the term is most commonly applied to the mechanical stamping of letters and parcels in place of fixing an adhesive stamp.
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A franking machine is a machine supplied by the Post Office to businesses who wish to frank their own mail. Instead of taking mail to a post office and using gummed stamps, the business uses the machine to produce slips of paper that state the postage and the date. The machine records the amount of money spent, which has to be remitted to the Post Office.
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A free port is a port, such as Bremerhaven, Gdansk, Rotterdam, or Singapore, that is free of customs duties. The area around the port, known as a foreign trade zone or free zone, specializes in entrepot trade, as goods can be landed and warehoused before re-export without the payment of customs duties.
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Freehold is an estate in land that is now usually held in fee simple. Land that is not freehold will be leasehold.
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The Fugio, also known as Franklin and sun-dial cents, were the earliest copper coins struck off by order of the US Government, from the dies of Abel Buel, in 1787. The first was struck off in New York. On the obverse it was engraved with thirteen linked rings, making an endless chain. And the legend: United States, inscribed around a small central field enclosing the inscription, We are one. On the reverse was an erect sun-dial, the sun appearing above and the legend: Fugio, 1787. Exergue: Mind your business.
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A futures contract is an agreement to buy or sell a fixed quantity of a particular commodity, currency, or security for delivery at a fixed date in the future at a fixed price. Unlike an option, a futures contract involves a definite purchase or sale and not an option to buy or sell; it therefore may entail a potentially unlimited loss. However, futures provide an opportunity for those who must purchase goods regularly to hedge against changes in price. For hedging to be possible there must be speculators willing to offer these contracts; in fact trade between speculators usually exceeds the amount of hedging taking place by a considerable amount.
In London, futures are traded in a variety of markets. Financial futures are traded on the London International Financial Futures Exchange; the Baltic Exchange deals with shipping and agricultural products; London FOX deals with cocoa, coffee, and other foodstuffs; the London Metal Exchange with metals; and the International Petroleum Exchange with oil. In these futures markets, in many cases actual goods do not pass between dealers, a bought contract being cancelled out by an equivalent sale contract, and vice versa; money differences arising as a result are usually settled through a clearing house. In some futures markets only brokers are allowed to trade; in others, both dealers and brokers are permitted to do so.
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Abbreviations
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