A:

Dead money is a common term used on Wall Street to describe money that does not earn a return for an investor. It could be money stashed in a mattress, non-interest yielding checking account or a security that does not yield returns. Any money or investment that does not grow or yield gains for the investor is usually referred to as "dead money".

When an investor invests in securities, the expectation is that the security or investment will yield some profitable returns. When an investment is not expected to yield any returns for the investor, the investment is referred to as a 'dead money investment'. Examples of dead money investments are shares or stocks of companies that are not expected to improve or appreciate past their current price. Like everything else, what an investment a trader or investor considers dead money might be considered profitable by another trader or investor depending on whether they want the stock to go up or down.

Finally, when an investment drops more than 80% in value, with no upwards movement for a few years, that stock is classified as "dead money stock".

This question was answered by Chizoba Morah.

RELATED FAQS
  1. What does a Dead Cat Bounce pattern tells traders about a stock?

    Identify the small rally characteristic of a dead cat bounce pattern as a technical trading pattern indicative of a strong, ... Read Answer >>
  2. How can a trader profit from a Dead Cat Bounce pattern?

    Profit from the dead cat bounce chart pattern by using the small, short-lived move upward to initiate a low-risk short position ... Read Answer >>
  3. What is the difference between yield and rate of return?

    Read about the differences between yield and rate of return. See why many novice investors often struggle more with the concept ... Read Answer >>
  4. What is the difference between the yield of stock and the yield of a bond?

    Explore and understand the various meanings of the investment term "yield" as it is applied to equity investments and bond ... Read Answer >>
  5. Are money market accounts for short-term investments a good idea?

    Learn whether money market accounts are good ideas for short-term investments. Money market accounts combine aspects of a ... Read Answer >>
  6. Is a money market account the same as a money market fund?

    Discover the differences between money market accounts and money market funds, including minimum balance requirements, withdrawal ... Read Answer >>
Related Articles
  1. Retirement

    The Pros And Cons Of Money Market Funds

    Find out whether stocking your money in these accounts will stand up to the test of time.
  2. Active Trading

    The Dead Cat Bounce: A Bear In Bull's Clothing?

    Make sure you know the difference between a change in market outlook and short-term recovery.
  3. Entrepreneurship

    Play Dead

    Stay calm, play dead and keep your eyes open for attractive valuations.
  4. Options & Futures

    20 Investments: The Money Market

    What Is It? The money market deals in fixed-income securities, not unlike the bond market. The major difference is that the money market deals in short-term debt and monetary instruments. In ...
  5. Entrepreneurship

    8 Ways To Survive A Market Downturn

    Stay calm, play dead and keep your eyes open for attractive valuations.
  6. Personal Finance

    Get A Short-Term Advantage In The Money Market

    This investment vehicle is often the perfect stop-gap measure for growing your money.
  7. Investing Basics

    The Pros And Cons Of Money Market Funds

    The pros to investing in the money market include the chance to park money in a safe haven during volatile times.
  8. Investing Basics

    Calculating Capital Gains Yield

    Capital gains yield refers to a security’s appreciation or depreciation during the time it’s held.
  9. Retirement

    Money Market: What Is It?

    The money market is a subsection of the fixed income market. We generally think of the term fixed income as being synonymous to bonds. In reality, a bond is just one type of fixed income security. ...
  10. Professionals

    Money, Banks, and the Federal Reserve

    CFA Level 1 - Money, Banks, and the Federal Reserve - Basics
RELATED TERMS
  1. Dead Money

    A slang term for money invested in a security with minor hopes ...
  2. Dead Presidents

    Slang referring to U.S. paper currency. Dead presidents can refer ...
  3. Drop Dead Fee

    Fee paid by a borrower to a lender when an acquisition deal falls ...
  4. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, ...
  5. Money Market Yield

    The interest rate earned by investing in securities with high ...
  6. Return Of Capital

    A return from an investment that is not considered income. The ...

You May Also Like

Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center