Investing FAQs

  1. My brokerage firm won't allow naked option positions. What does this mean?

  2. Does issuing preferred shares offer a tax advantage for corporations?

  3. What are the disadvantages of using net present value as an investment criterion?

  4. How does the required rate of return affect the price of a stock, in terms of the Gordon growth model?

  5. How can I determine a stock's next resistance level or target price?

  6. What effect does a company's dividend reinvestment plan have on its stock price?

  7. What is a GTEM order?

  8. Who or what are the turtles?

  9. What is an Islamic investment policy?

  10. What is a trailing commission?

  11. What is hedging as it relates to forex trading?

  12. What causes a recession?

  13. Can a company declare a dividend that exceeds its earnings per share?

  14. What happens to the stock prices of two companies involved in an acquisition?

  15. What's the difference between bills, notes and bonds?

  16. Where can I find a company's annual report and its SEC filings?

  17. What is the difference between a blend fund and a balanced fund?

  18. How do I find historical prices for stocks?

  19. What is a mutual fund's NAV?

  20. What's the difference between a regular option and an exotic option?

  21. I hold stock certificates in a company that just had a stock split. What happens now?

  22. How do I calculate how much I've gained or lost on a stock holding?

  23. What is a convertible bond?

  24. What do the "BxA" numbers on my brokerage's trading screen mean?

  25. How is spread calculated when trading in the forex market?

  26. How does a stop-loss order work, and what price is used to trigger the order?

  27. Why would my stock's value decline despite good news being released?

  28. Can someone who is not yet of legal age open a brokerage account?

  29. Can investors short sell pink sheet or over-the-counter stocks?

  30. What is a virtual trailing stop order (VTSO)?

  31. Why does a crisis in emerging markets cause U.S. Treasury yields to decrease?

  32. Is it possible to buy mutual funds using a margin account?

  33. What is a liquidity squeeze?

  34. Are all bank accounts insured by the FDIC?

  35. What does negative shareholder equity on a balance sheet mean?

  36. What's the difference between "top-down" and "bottom-up" investing?

  37. Who's in charge of managing exchange-traded funds?

  38. What's the difference between absolute and relative return?

  39. What does "buy and hold" mean?

  40. Can you short sell stocks that are trading below $5? My broker says that I can't.

  41. What is the 'Rule of 72'?

  42. What's the difference between absolute P/E ratio and relative P/E ratio?

  43. What are the generally accepted accounting principles for inventory reserves?

  44. How does a point change in a major index effect its equivalent exchange-traded fund?

  45. Stocks with high P/E ratios can be overpriced. Is a stock with a lower P/E always a better investment than a stock with a higher one?

  46. How is the value of the S&P 500 calculated?

  47. What will happen to my U.S.-based stock portfolio if the U.S. dollar substantially decreases in value?

  48. Do stop or limit orders protect you against gaps in a stock's price?

  49. How are realized profits different from unrealized or so-called "paper" profits?

  50. Why are options very active when they are at the money?

  51. Is it possible to lose all of your investment in an index fund?

  52. If a company moves its dividend record date forward, does the ex-dividend date change too?

  53. Does a strong trend (ADX > = 40) cause an increase in volatility?

  54. What do the different colored candlesticks mean?

  55. Why doesn't the price of a callable bond exceed its call price when interest rates are falling?

  56. What is the difference between a collateralized mortgage obligation (CMO) and a collateralized bond obligation (CBO)?

  57. Why did dotcom companies crash so drastically?

  58. What is earnings management?

  59. Why do some closed-end mutual funds trade above or below their net asset values?

  60. Where can I find historical stock/index quotes?

  61. I will be receiving monies from a QDRO executed pursuant to my divorce. I would like to take a portion of the money as a distribution to pay for a new home. What are the tax implications of doing this?

  62. What is a treasury stock?

  63. What is arbitrage?

  64. What does it mean to use technical divergence in trading?

  65. What is an efficient market and how does it affect individual investors?

  66. What are the minimum margin requirements for a short sale account?

  67. What is the difference between convertible and reverse convertible bonds?

  68. What technical tools can I use to measure momentum?

  69. What is the difference between a logarithmic price scale and a linear one?

  70. Why do low interest rates cause investors to shy away from the bond market?

  71. When does one sell a put option, and when does one sell a call option?

  72. How do I calculate the adjusted closing price for a stock?

  73. What does it mean when a bond has a put option?

  74. Do all international markets trade between 9:30am and 4pm local time?

  75. If an employee is paid by commission, who is responsible for withholding taxes?

  76. How do I avoid paying excess taxes on securities I have sold?

  77. How do you determine a company's percentage of credit sales?

  78. What is the best method of analysis for forex trading?

  79. Can I match a fund to my religion?

  80. How do I use a "basket" option?

  81. What is market capitulation?

  82. What's the smallest number of shares I can buy?

  83. What is a stock split? Why do stocks split?

  84. What's the smallest number of shares of stock that I can buy?

  85. Why do option volume quotes differ on different websites?

  86. What is a pure play?

  87. A corporate bond I own has just been called by the issuer. How can a company legally take away my bond? How do these call provisions work?

  88. Can a stock have a negative price-to-earnings (P/E) ratio?

  89. When short selling a stock, how long does a short seller have before covering?

  90. Short selling vs. purchasing a put option: how do the payoffs differ?

  91. Do convertible bonds have voting rights?

  92. Why do commercial bills have higher yields than T-bills?

  93. How are foreign exchange rates affected by commodity price fluctuations?

  94. Is there a difference between ADR and ADS?

  95. Does a stock dividend dilute the price per share as would a forward stock split?

  96. What is the best time of the day to trade?

  97. Can a church issue a bond?

  98. Does a company's American depositary share equal one share of common stock?

  99. I sold my house. Can I exclude the gain from my income?

  100. What is fair capital?

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