An ECN or Electronic Communication Network is a computer network that facilitates the trading of stocks outside of the regular market hours.
Discount refers to the price of a bond when it is below its par value. An example is if the par value of the bond is $1,000 and the bond is selling for $980, the bond is selling at a discount of ($1,000 – $980) =$20.
Derivative is a type of security whose value is “derived” from an underlying asset. (Eg; Futures and Options). Futures and options are both derivatives – meaning a security whose value solely depends on the value of the underlying asset. A future derives its value from the commodities or currencies which it represents An option derives Read More…
A depression is a recessionary decline in real GDP (taking inflation into account) greater than 10% lasting at least 3 years.
Delta is also called the hedge ratio, which is the ratio of the change in price of an option to the change in price of the underlying stock.
Currency Risk is the risk an investor is exposed to when investing in international markets. Currency risk is mainly associated with the fluctuations in exchange rates of the various world currencies.
Coupon Rate is the rate of interest paid on a bond, expressed as a percentage of the bond’s face value.
A Coupon is the periodic interest payment made to a bondholder during the life of the bond. (Usually semi-annual)
Convertible Preferred Stock are Preferred stock that can be converted into common stock at a particular time frame.
Convertible Bonds are bonds that can be converted into Common Stock usually at the maturity of the bond.
A Contract is term that describes the unit of trading for a stock option, future option or future. It lists all the obligations and particulars related to the security.
Buy-Sell Agreement is an agreement between shareholders or business partners where both parties agree to purchase or sell a stock.
Book Value is the price at which the buyer purchases the asset for.
What are they doing with your money? Have you ever wondered how well your money is really being managed by the corporations you hand it over to? After all, the media is full of stories about CEO compensation reaching new heights, buy-outs of non-profitable holdings, million dollar birthday parties and other horror stories. Formula for Read More…
A Cash Flow Statement is a financial statement that shows the flow of cash in and out of the business. The Cash Flow Statement is particularly useful for investors and lenders to determine the short-term viability of a company with respect to its ability to pay its debts. In the statement, money coming in to Read More…
Learning different methods to do your own stock market research will enable you to make a better decision whether to, or not to enter into specific trading and investing positions. Keep the brokers in check In the past, many people relied on investment brokers to provide recommendations and whatever they said, was the way to go, or Read More…
Investors that would never think of taking a gamble on a “hot stock tip” overheard on a discussion forum or elevator routinely fall victim to another common fallacy: Believing everything they read as long as it is cloaked in the shroud of an “analyst report”. What is this Analyst Report? Analyst report stock recommendations based Read More…
EPS (Earnings-Per-Share) measures how much of a company’s net income actually trickles down to each outstanding share. Any preferred dividends are first taken out of the net income before calculating EPS. Interpreting EPS Earnings Per Share can be used to compare the earnings of two or more companies in a similar industry. Just because one Read More…
PE Ratio (Price-to-Earnings) is a valuation ratio that compares the price per share of a company’s stock to its earnings per share. It basically shows how much investors are willing to pay for a share given the earnings currently generated. It is also used to analyze whether a stock is overvalued or undervalued. Formula How Read More…
A Sharpe Ratio calculates the extra return of an investment in return for the extra risk taken on. It is used to compare different investments to see which one did better given the different risk of each. It is measured as taking the difference between a risk-free and a risky asset, and then dividing the difference by the Standard Deviation (which Read More…
“Learning is not attained by chance; it must be sought for with ardor and attended to with diligence.” – Abigail Adams (1744-1818) Google (NASDAQ: ) You may have heard of technical analysis before or maybe you’re wondering what all the squiggly lines on ’s chart above represent. Those lines are a result of technical analysis. Technical analysis Read More…
Fundamental analysis is the process of looking at the basic or fundamental financial level of a business, especially: sales earnings growth potential assets debt management products competition This type of analysis examines key ratios of a business to determine its financial health and gives you an idea of the value its stock. Many investors use Read More…
Most investors don’t know the significance of a stock’s daily volume. Learn the four wonders of high volume and the four dangers of low volume. Volume plays a very important role in stock trading especially, when day trading. For those of you who don’t know what volume is, it’s the total amount of shares traded of Read More…
Options can be extremely lucrative, but also very dangerous if not properly understood. One of the first steps in learning how to trade options is to understand how to read an options table. Below is an example of a basic options table of Google (GOOG) expiring in October 2011: Calls and Puts: There are two types of Read More…
Is Technical Analysis voodoo? Contrary to what some people think, Technical Analysis is not a kind of black magic or sorcery. Also, the use of technical analysis does not increase as we get closer to Halloween. It is important to keep an open mind and realize that things such as trend lines, triangles, and other Read More…
Class B Shares are a form of common stock that may have more or less voting rights that Class A shares. Generally Class B shares have lesser voting rights, but be vary of some companies that trick investors by using the perception of Class “B” (compared to “A”) shares to attach more voting rights to them Read More…
When would I use this strategy? A Covered Call Strategy is for investors who feel that the stock price will either remain stable or will grow. This strategy is NOT for investors who think the price of the stock will go down. How do I execute this strategy? The strategy entails two steps: Write a Read More…
Class A Shares are a form of common stock that may have more or less voting rights that Class B shares. Generally Class A shares have more voting rights, but companies sometimes trick investors by using the perception of “Class A” shares to attach fewer voting rights to them than Class B shares.
Balanced Fund is a type of Mutual Fund whose main objective is to diversify risk by holding a defined percentage of different security types including stocks, bonds, and money market instruments
An Aggressive Growth Fund is a form of Mutual Fund whose main investment objective is to achieve capital gains. These funds are perceived to generate high returns, and are catered to investors who have a high tolerance for risk.
For each model stock portfolio that is created by Lady Luck, there are thousands that are designed using a valid and well thought-out investment strategy. What is taught about the Model Stock Portfolio? Financial Portfolio Management training all over the world stresses adopting a market game strategy that fits the investor’s: Personality (Who are you? Read More…
If you have never traded options before, don’t worry; it’s easier than you might think. But before you can even begin trading options, you need to understand what an option is. Definition of an Option An option is the right to buy or sell an asset, not an obligation. In other words, the option does not force you Read More…
Are your students studying the global economy or the stock market? Are they aware of publicly traded companies in the global market? This lesson provides research opportunities for students as they locate and investigate global companies listed on the DOW, NASDAQ and the New York Stock Exchange (NYSE).