Investopedia Staff

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  1. Centipede Game
    Term

    Centipede Game

    An extensive-form game in game theory in which two players alternately get a chance to take the larger share of a slowly increasing money stash.
  2. Cournot Competition
    Term

    Cournot Competition

    An economic model that describes an industry structure in which competing firms that make the same homogeneous and undifferentiated product choose a quantity to produce independently and simultaneously.
  3. Stock Split
    Term

    Stock Split

    A corporate action in which a company divides its existing shares into multiple shares. Although the number of shares outstanding increases by a specific multiple, the total dollar value of the shares ...
  4. Competitive Devaluation
    Term

    Competitive Devaluation

    A series of sudden currency depreciations that nations may resort to in tit-for-tat moves to gain an edge in international export markets.
  5. Matching Pennies
    Term

    Matching Pennies

    A basic game theory example that demonstrates how rational decision-makers seek to maximize their payoffs. “Matching Pennies” involves two players simultaneously placing a penny on the table, with the ...
  6. Sudden Stop
    Term

    Sudden Stop

    An abrupt reduction in net capital flows into an economy. A Sudden Stop is characterized by swift reversals of international capital flows, declines in production and consumption, and corrections in asset ...
  7. Trade in Value Added (TiVA)
    Term

    Trade in Value Added (TiVA)

    A statistical method used to estimate the sources of value added when producing goods and services for export and import.
  8. S&P/ASX 200 VIX (A-VIX)
    Term

    S&P/ASX 200 VIX (A-VIX)

    A real-time index that reflects investor expectations about volatility over the next 30 days in the S&P/ASX 200, the Australian benchmark equity index.
  9. Net International Investment Position (NIIP)
    Term

    Net International Investment Position (NIIP)

    A nation’s stock of foreign assets minus its foreign liabilities. The Net International Investment Position (NIIP) can also be defined as the value of overseas assets owned by a nation minus the value ...
  10. Current Transfers
    Term

    Current Transfers

    A current account transaction in which a resident entity in one nation provides a nonresident entity with an economic value, such as a real resource or financial item, without receiving something of economic ...
  11. Gross National Income (GNI)
    Term

    Gross National Income (GNI)

    The sum of a nation’s gross domestic product (GDP) plus net income received from overseas.
  12. Sterilized Intervention
    Term

    Sterilized Intervention

    The purchase or sale of foreign currency by a central bank to influence the exchange value of the domestic currency, without changing the monetary base.
  13. Satisfaction of Mortgage
    Term

    Satisfaction of Mortgage

    A document generated and signed by a mortgage lender, acknowledging that the borrower has paid off the mortgage loan in full and that the mortgage is not a lien on the property.
  14. Penny Stock Reform Act
    Term

    Penny Stock Reform Act

    A securities act enacted in 1990 that sought to clamp down on fraud in non-exchange-listed stocks priced below $5 that generally trade in the over-the-counter market.
  15. Carriage Paid To (CPT)
    Term

    Carriage Paid To (CPT)

    A commercial term denoting that the seller delivers the goods to a carrier or to another person nominated by the seller, at a place mutually agreed upon by the buyer and seller, and that the seller pays ...
  16. Carriage And Insurance Paid To (CIP)
    Term

    Carriage And Insurance Paid To (CIP)

    A commercial term indicating that the seller delivers the goods to a carrier or to another person nominated by the seller, at a place mutually agreed upon by the buyer and seller, and that the seller pays ...
  17. Form 211
    Term

    Form 211

    1. A form that must be completed by a market maker and filed with the Financial Industry Regulatory Authority (FINRA) to initiate or resume quotations for a security on the OTC Bulletin Board, OTC Markets ...
  18. Nasdaq-100 Pre-Market Indicator
    Term

    Nasdaq-100 Pre-Market Indicator

    An index of trading activity based on pre-market open prices for the Nasdaq-100.
  19. Net Foreign Assets (NFA)
    Term

    Net Foreign Assets (NFA)

    The value of overseas assets owned by a nation, minus the value of its domestic assets that are owned by foreigners, adjusted for changes in valuation and exchange rates. A nation's Net Foreign Assets ...
  20. Flash Freeze
    Term

    Flash Freeze

    A sudden shutdown in trading activity on an exchange. “Flash freeze” was first used to refer to the abrupt outage on the Nasdaq on Aug. 22, 2013, which halted trading for three hours on one of the busiest ...
  21. Net Foreign Factor Income (NFFI)
    Term

    Net Foreign Factor Income (NFFI)

    The difference between a nation’s gross national product (GNP) and gross domestic product (GDP). Net foreign factor income (NFFI) is the difference between the aggregate amount that a country’s citizens ...
  22. Trading Psychology
    Term

    Trading Psychology

    The emotions and mental state that dictate success or failure in trading securities. Trading psychology refers to the aspects of an individual’s mental makeup that help determine whether he or she will ...
  23. Green Chip Stocks
    Term

    Green Chip Stocks

    Shares of companies whose primary business is beneficial to the environment. Green chip stocks are generally likely to be concentrated in areas such as alternative energy, pollution control, carbon abatement ...
  24. Determining Risk And The Risk Pyramid
    Investing Basics

    Determining Risk And The Risk Pyramid

    Many investors do not understand how to determine the risk level their individual portfolios should bear.
  25. The Legacy Of Ben Bernanke
    Economics

    The Legacy Of Ben Bernanke

    Will Bernanke go down in history as one of the greatest-ever chairpersons of the Fed, or is his legacy likely to be tarnished by events after his departure from the position, as was the case with his predecessor ...
  26. The Basics Of Short Selling
    Investing Basics

    The Basics Of Short Selling

    Short sellers enable the markets to function smoothly by providing liquidity, and also serve as a restraining influence on investors’ over-exuberance.
  27. Interesting Facts About Imports And Exports
    Economics

    Interesting Facts About Imports And Exports

    Imports and exports exert a profound influence on the consumer and the economy. Learn what affects these figures, and in turn how these figures affect the economy.
  28. Financial Analysis: Solvency Vs. Liquidity Ratios
    Fundamental Analysis

    Financial Analysis: Solvency Vs. Liquidity Ratios

    Solvency and liquidity are equally important for a company's financial health. A number of financial ratios are used to measure a company’s liquidity and solvency, and an investor should use both sets ...
  29. What Are Frontier Markets?
    Investing Basics

    What Are Frontier Markets?

    Frontier markets refer to equity markets in small nations that are at an earlier stage of economic and political development than larger and more mature emerging markets. These markets typically have modest ...
  30. Straight Credit
    Term

    Straight Credit

    A type of letter of credit. A straight credit can only be paid at the counters of the paying bank or a named drawee bank that has been authorized to make payment. Payment can only be made to the beneficiary ...
  31. Order Book
    Term

    Order Book

    An electronic list of buy and sell orders for a specific security or financial instrument, organized by price level. The order book lists the number of shares being bid or offered at each price point, ...
  32. Sick Industrial Companies Act (SICA)
    Term

    Sick Industrial Companies Act (SICA)

    A key piece of legislation dealing with the issue of rampant industrial sickness in India. The Sick Industrial Companies (Special Provisions) Act (SICA) of 1985 was enacted in India to determine the extent ...
  33. Pain Trade
    Term

    Pain Trade

    The tendency of markets to deliver the maximum amount of punishment to the most investors from time to time. A pain trade occurs when a popular asset class or widely followed investing strategy takes an ...
  34. Documentary Collection
    Term

    Documentary Collection

    A trade transaction in which the exporter hands over the task of collecting payment for goods supplied to his or her bank, which sends the shipping documents to the importer’s bank together with payment ...
  35. Market Discount
    Term

    Market Discount

    The difference between a bond's stated redemption price and its purchase price on the secondary market, if it has been purchased at a price below par. Market discount arises when a bond's value on the ...
  36. Short Selling
    Term

    Short Selling

    The sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is motivated by the belief that a security's price will decline, enabling it to be bought back at ...
  37. Average Cost Basis Method
    Term

    Average Cost Basis Method

    A system of calculating the cost basis on mutual fund positions held in a taxable account to determine the profit or loss on them. The average cost basis method adds up the cost basis for the entire position ...
  38. Bear Raid
    Term

    Bear Raid

    The illegal practice of ganging up to push a stock's price lower through concerted short selling and spreading adverse rumors about the targeted company.
  39. Trailing Stop
    Term

    Trailing Stop

    A stop order that can be set at a defined percentage away from a security's current market price. A trailing stop for a long position would be set below the security’s current market price; for a short ...
  40. Dealer
    Term

    Dealer

    A person or firm in the business of buying and selling securities for their own account, whether through a broker or otherwise.
  41. Debt Ratio
    Term

    Debt Ratio

    A financial ratio that measures the extent of a company’s or consumer’s leverage. The debt ratio is defined as the ratio of total debt to total assets, expressed in percentage, and can be interpreted as ...
  42. Difference Between Short Selling And Put Options
    Investing Basics

    Difference Between Short Selling And Put Options

    Short selling and put options are essentially bearish strategies used to speculate on a potential decline in a security or index, or to hedge downside risk in a portfolio or specific stock.
  43. Market-Maker Spread
    Term

    Market-Maker Spread

    The difference between the price at which a market maker is willing to buy a security and the price at which it is willing to sell the security. The market-maker spread is the difference between the bid ...
  44. Bear Tack
    Term

    Bear Tack

    A decline in the price of a stock, sector or market that may be a harbinger of a bearish trend. A bear tack suggests that the asset or market could be in for a significant price correction. However, it ...
  45. Cost Of Capital
    Term

    Cost Of Capital

    The required return necessary to make a capital budgeting project, such as building a new factory, worthwhile. Cost of capital includes the cost of debt and the cost of equity.
  46. Equity Financing
    Term

    Equity Financing

    The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in ...
  47. Return On Capital Employed (ROCE)
    Term

    Return On Capital Employed (ROCE)

    A financial ratio that measures a company's profitability and the efficiency with which its capital is employed. Return on Capital Employed (ROCE) is calculated as: ROCE = Earnings Before Income and Tax ...
  48. Countervailing Duties
    Term

    Countervailing Duties

    Tariffs levied on imported goods to offset subsidies made to producers of these goods in the exporting country. Countervailing duties (CVD) are meant to level the playing field between domestic producers ...
  49. Uptick
    Term

    Uptick

    A transaction for a financial instrument that occurs at a higher price than the previous transaction. An uptick has occurred if a stock's price has increased in relation to the last “tick” or trade. The ...
  50. Long/Short Equity
    Term

    Long/Short Equity

    An investing strategy of taking long positions in stocks that are expected to appreciate and short positions in stocks that are expected to decline. A long/short equity strategy seeks to minimize market ...
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