00:01
We're going to look at some economic terms and explain the difference between them.
00:07
Trust versus merger.
00:09
A trust is a fiduciary relationship in which a truster gives another party, who is known as the trustee, the right to hold title to property or assets for the benefit of a third party.
00:20
While they are generally associated with the idle rich, trusts are highly versatile instruments, which can be used for a wide variety of purposes to achieve specific goals.
00:29
Each trust falls into six broad categories, living or testamentary, funded or unfunded, revocable or irrevocable.
00:39
A merger, so the terms merger and acquisition are often used interchangeably.
00:45
However, they mean different things.
00:47
In an acquisition, one company purchases another outright, whereas in a merger, they combine.
00:52
It's the combination of two firms, which subsequently forms a new legal entity under the banner of one corporate name.
00:59
A company can be objectively valued by studying comparable companies in an industry and using metrics.
01:07
Price fixing versus predatory pricing.
01:09
Price fixing is the practice of setting the price of a product rather than allowing it to be determined by free market forces.
01:16
Fixing is illegal when it involves collusion among two or more producers of a product or service to maintain artificially high prices or keep the prices they pay their suppliers artificially low.
01:28
So basically it's when people in one industry get together to keep the price at a certain price level.
01:36
According to the ftc, a legal price fixing is a written verbal or inferred agreement among competitors that raises, lowers, or stabilizes price or competitive terms.
01:48
Predatory pricing, in a predatory pricing scheme, prices are set low to attempt to drive out competitors and create a monopoly...