A Disposition refers to the act of selling or otherwise “disposing” of an asset or security. The most common form of Disposition would be to sell an equity investment on the open market, such as a stock market. Other types of arrangements could include donations to charities or trusts. Real estate (a building), land and other types of assets can also be considered as transferable assets. However, other forms of disposition involve transfers and assignments. The bottom line is that the investor has given up the (alienated) possession of certain assets.
Quick points to remember about the provisions
· A provision refers to the sale or disposal of an asset or security.
· The most common form of disposal is the sale of securities on the open market, such as the sale of a stock market investment.
· The arrangements may also take the form of donations to charities or charitable trusts.
. Most asset classes can be sold at one time or another: stocks, bonds, art and land, to name a few.
The basis for a decision
Suppose an investor has owned a particular business for a long time, but lately the business has not been doing so well. If she decides to exit the investment, this would amount to a disposition of that investment. Most likely, she would sell her shares through a stock broker. Finally, she decided to get rid of this investment or dispose of it.
Other types of disposition include transfers and assignments, when a person legally transfers or transfers particular assets to their family or to a charity or other type of organization. Most of the time, this is done for tax and accounting purposes, where the transfer or disposal frees up the tax shredder or other liabilities. The transfer or assignment can be permanent or based on temporary factors, such as the value of the collateral on a loan.
An example of a decision
His alma mater approaches a rich elder for a donation for the construction of a new dormitory. After being very convincing, the former student agrees to make a significant donation. For this to happen, the former student will likely need to have some of their assets, be it stocks, or land, or any other related asset. After his decision, he now has the funds available to donate to his old school. a loan from a credit institution. If an investor has a margin account, for example, and a broker sells stocks in that margin account, this is considered an equity provision.