Dupont Analysis breaks the Return on Equity into several different components in order to analyze where the returns are coming from.
If you own a bond or manage a bond portfolio, chances are that will you be following daily interest rates. You know that bond prices increase when rates rise, and decrease when rates fall. But how do you measure the bond’s price sensitivity to such rate fluctuations? The answer is duration.
Earnings estimates provide one strong measure of potential future performance and are a mainstay of stock investing research.
The earnings reports released by companies can be invaluable in providing such information. Released by public companies on a quarterly and annual basis, they can be used to assess and gauge a company’s: financial condition, strategic plans, industry and competitive position, Key performance drivers and risk factors and Future performance.
An ECN or Electronic Communication Network is a computer network that facilitates the trading of stocks outside of the regular market hours.
Decreasing the long-run average and marginal costs that come from an increase in the size of a factory or plant.
Elasticity is one of the most important terms in economics, and has a plethora of uses. Economists define elasticity as the ratio of the percent change in one variable to the percent change in another valuable.
What does it mean to be an Entrepreneur? An Entrepreneur is someone who takes a risk to start a new business. Nearly every business that exists (apart those created as spin-offs of other businesses, or by government intervention) was started by one or several entrepreneurs, who took a risk to launch a new company. Who becomes an Entrepreneur? Starting and running a small business is not … Continue reading Entrepreneurship – Building Long Term Growth
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 company makes more money than another, it does not mean … Continue reading EPS: Earnings Per Share
Equity is the residual interest of an owner in an asset after all debt and tax payments have been taken care of.
Excess Return is the return in excess of that required by shareholders based on the beta of the company.
When a company offers to trade one security in return for another security.
ETFs are a fairly new way that you can buy a large group of stocks, assets, or other securities all at once. ETFs trade just like stock; you can buy and sell shares of an ETF throughout the day on an exchange. Definition “ETF” stands for “Exchange Traded Fund”, which is exactly how it sounds; they are like mutual funds in many ways, but they … Continue reading Exchange Traded Fund (ETF)
The Expected Return is a weighted-average outcome used by portfolio managers and investors to calculate the value of an individual stock, or an entire stock portfolio.
Expiration Date is the last day upon which an option or futures contract can be exercised or traded.
Expirations determine when your order gets placed on the market.
Definition In Economics, an “Externality” is a benefit or cost that is not reflected in the price of a good or service. Why do Externalities Exist? Prices are determined by the relationship between the supply and demand of a good or service (for details, see our article on Supply and Demand Examples in the Stock Market). This, in turn, is determined by individual producers and … Continue reading Externalities
A phrase used for a stock where the price has dropped significantly in a short period of time. A falling knife security can rebound, or it can lose all of its value where the shares become worthless.
Definition The Federal Reserve Bank, or the “Fed”, is the central banking system of the United States. It serves as the primary regulator of the US dollar, as well as the “lender of last resort” for other banks. Regulating Currency The Federal Reserve works to maintain the interest rates that banks use to lend money to each other – and by extension – the interest rate … Continue reading Federal Reserve
Fibonacci Arc is a technical analysis indicator and is utilized to give hidden support and resistance levels for security. It is built by drawing a trend line between two swing points on a chart.
As you begin working with financial institutions to secure your money and process your financial transactions, it is important that you learn to keep good financial records. These records, both on paper and electronic, will allow you to know where your money and assets are and exactly how much you have at a given time. You may choose to print these documents and keep them … Continue reading Financial Records
Fiscal policy is the use of government spending to influence the economy.
Fixed income analysis is the process of evaluating and analyzing fixed income securities for investment purposes. Fixed Income represents a distinct asset class. Investors and analysts perform fixed-income analysis to Evaluate the risk characteristics underlying debt securities and to assess the capacity of the borrowing entity to meet its financial obligations (credit analysis) Identify which debt securities represent attractive investment opportunities Determine the appropriate valuation … Continue reading Fixed Income
A floor is an options insurance strategy where you simultaneously have a long open position on a stock and a long put for the same underlying asset. Adding a long put to your open position means that you are obligated to sell your stock at the strike price. The long put ensure that you can sell your stocks at a defined price. Since you already … Continue reading Floor
Live Forex trading includes negotiating of national bills which is performed on a live basis at 24 hour, around-the-clock period. Forex is derived from the words Foreign Exchange which is known as the global market that does business in money trading.
Companies with more than $10 million in assets and a class of equity securities that is held by more than 500 owners must file annual and other periodic reports, regardless of whether the securities are publicly or privately traded. Up until March 16, 2009, smaller companies could use Form 10-KSB. If a shareholder requests a company’s Form 10-K, the company must provide a copy. In addition, most large companies must disclose on Form 10-K whether the company makes its periodic and current reports available, free of charge, on its website. Form 10-K, as well as other SEC filings may be searched at the EDGAR database on the SEC’s website.
Form 10-Q, is also known as a 10-Q or 10Q, is a quarterly report mandated by the United States federal Securities and Exchange Commission, to be filed by publicly traded corporations.
The Form-8K is a SEC-mandated report filed by public companies to report unexpected events or transactions that are material in nature, and thus have an impact on the share prices of the company.
Free Cash flow is the cash available to all the capital providers of a company. There are two types of free cash flows: 1) Cash flow available to pay out to all capital providers and 2) Free Cash Flow to Equity (FCFE).
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, and competition.
Future Options are exactly what their name implies – an option on a futures contract. Futures and Options – Related Derivatives 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 its value from the underlying stock Futures … Continue reading Future Options
Futures Contracts are a standardized, transferable legal agreement to make or take delivery of a specified amount of a certain commodity, currency, or an asset at the end of specified time frame. The price is determined when the agreement is made. Future contracts are always marked to market.
Gross National Product is the value of all goods and services produced by a country’s residents.
An order to buy or sell a stock at a fixed price. This order is active until 1) the trade is executed, 2) the investor decides to cancel it or 3) a specified time period elapses.
Good Till Date Order Terms If you have ever placed a limit or stop order, you have see the “Good Till Day” order term on the trading menu: A “Good-Till-Day” order is simply one that will cancel at the end of the trading day if it does not fill. So, for example, if you have Apple stock, and today you know they are releasing an … Continue reading GTD Good Till Day Orders
How Do I Build a Diversified Portfolio? Understanding what it means to build a diversified portfolio is one of the first concepts a new investor needs to understand. When talking about stocks, diversification means to make sure you don’t “put all of your eggs in one basket.” What Does It Mean To Diversify? Simply put, to “diversify” means to make sure pick a variety of … Continue reading Portfolio Diversification
The Fed is the US central-banking system which is made up of 12 regional central banks
Brokerages exist to allow individuals to make investments into the larger market. In other words, they connect individuals to the markets as a whole. Securities Brokers help individuals trade securities, the security type will change depending on the broker, but they usually fall into these categories: Cash (including Foreign Exchange markets) Individual Securities Bonds and Debts Stocks Structured Products Mutual Funds Exchange Traded Funds (ETF) … Continue reading What is a Brokerage?
A long call is a term used when you own a call option for an underlying asset. A call option is a contract where the buyer has the right (not the obligation) to exercise a buy transaction at a specific strike price at or before an expiration date. In the world of trading, owing a long call means that you have a contract that gives … Continue reading What Is A Long Call?
Recall that a call option is a contract where the buyer has the right (not the obligation) to exercise a buy transaction at a specific strike price at expiration date. A short call is a term used when you sell a call option for an underlying asset. A trader that has a short call option is also referred as a trader that wrote a call … Continue reading What Is A Short Call?