Investing - All Content

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  1. What is Adverse Selection?

    Adverse selection occurs when one party in a transaction has more information than the other, especially in insurance and ...
  2. What is a Capital Account?

    Capital account is an economic term that refers to the net change in investment and asset ownership for a nation.
  3. Understanding Carrying Value

    Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value. ...
  4. Explaining Expected Return

    The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome. ...
  5. Understanding the Fisher Effect

    The Fisher effect states that the real interest rate equals the nominal interest rate minus the expected inflation rate. ...
  6. Explaining the Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  7. U.S. Investors Are Seeking Opportunities Overseas

    A latest analysis leads to believe that many investors are applying a spring cleaning approach to their portfolios, rebalancing ...
  8. What is Capital Stock?

    Capital stock refers to the number of authorized shares a corporation may issue, both common and preferred.
  9. Three Portfolio Moves To Consider Now

    What portfolio moves should you consider making as the 2nd quarter kicks off? Before we focus on the future, let’s first ...
  10. Manage Investments And Modern Portfolio Theory

    Modern Portfolio Theory suggests a static allocation which could be detrimental in declining markets, making it necessary ...
  11. Key Factors Of The Russell 2000 Index

    The Russell 2000 index represents the small cap universe, with a broad selection of fast growth companies at the bottom end ...
  12. The Labor Market Recovery’s Missing Ingredient

    Job creation is running at the fastest pace since the 90s, and there is some evidence that wage growth is finally starting ...
  13. Why These May Be the Top 4 Growth Stocks of 2015

    These four stocks have high upside potential in 2015.
  14. Gambling on Macau: Too Risky?

    Macau was once heralded as the new Las Vegas for casino investors. Is it too late?
  15. Why the House (and Las Vegas Sands) Always Wins

    An in depth look at how Las Vegas Sands became a multi-billion dollar company.
  16. What techniques are most useful for hedging exposure to the banking sector?

    Learn how investors hedge exposure to the banking sector by investing in more aggressive sectors and also by investing in ...
  17. How do I find the information needed for input into the Dividend Discount Model (DDM)?

    Learn where analysts and investors can find the three pieces of necessary information that allow them to calculate the dividend ...
  18. What does the Dividend Discount Model (DDM) show an investor about a company?

    Discover the purpose of the dividend discount model, or DDM, of stock analysis and what it specifically aims to evaluate ...
  19. What is the variance/covariance matrix or parametric method in Value at Risk (VaR)?

    Learn about the value at risk and how to calculate the value at risk of an investment portfolio using the variance-covariance, ...
  20. During what stage of the economic cycle should I invest in the drugs sector?

    Learn why the expansionary stage of the economic cycle represents the best time to invest in the pharmaceuticals and biotechnology ...
  21. How is it possible for a rate to be entirely risk-free?

    Find out whether there really is such a thing as a risk-free rate of return, and learn why taking the idea of risk-free rates ...
  22. If a company has a high debt to capital ratio, what else should I look at before ...

    Learn about some of the financial leverage and profitability ratios that investors can analyze to supplement examining the ...
  23. How can a firm bring down its operating leverage?

    Discover how to determine a company's operating leverage and how this metric can be helpful to analysts and investors when ...
  24. Is the banking sector a good choice for value investing?

    Find out why the banking sector is attractive to value investors, who typically look to buy discounted stocks during times ...
  25. How does DuPont Analysis measure profitability?

    Discover how the DuPont analysis system breaks down a company’s return on equity into three parts to fully analyze its efficiency ...
  26. What is the difference between a term and open repurchase agreement?

    Learn about the main difference between a term and open repurchase agreement, including when each is used and how the interest ...
  27. What is backtesting in Value at Risk (VaR)?

    Learn about the value at risk of a portfolio and how backtesting is used to measure the accuracy of value at risk calculations.
  28. Pockets Of Value In The Stock Market

    U.S. stocks benefited from signs the Fed’s path toward higher interest rates, as well as from continued merger-and-acquisition ...
  29. When To Expect Fed Liftoff Now

    “When will the Fed raise interest rates?” That has been the question of many investors since the Fed indicated it was prepared ...
  30. Which financial statements are most important when performing ratio analysis?

    Learn which financial statements are used for ratio analysis. Find out what financial data is needed to conduct fundamental ...
  31. How much variance should an investor have in an indexed fund?

    Learn more about the significance of variance in index funds, its value as a measure of volatility and other common analytical ...
  32. How is the risk-free rate of interest used to calculate other types of interest rates ...

    Learn how the risk-free rate is used to compare the yields on bonds, and understand how T-bills are used as a proxy for the ...
  33. How does behavioral economics treat risk aversion?

    Learn about the relationship between decision-making and risk, as described by one of the foundational theories in behavioral ...
  34. How do I discount Free Cash Flow to the Firm (FCFF)?

    Find out how to perform (relatively) simple estimates of discounted future cash flow to the firm using the single-stage WACC ...
  35. Where can I find a good compound interest calculator free on the Internet?

    Understand compound interest calculations and learn where you can find a good, free online compound interest calculator to ...
  36. What's the difference between a confidence level and a confidence interval in Value ...

    Learn about the value at risk, how confidence intervals and confidence levels are used to interpret the value at risk and ...
  37. What are some examples of inherent risk?

    Read about the nature of inherent risk in preparing and executing financial audits, including some common situations that ...
  38. What is the automotive sector?

    Explore the automotive sector, which includes manufacturers, retailers, wholesalers and original equipment manufacturers, ...
  39. What does Value at Risk (VaR) say about the "tail" of the loss distribution?

    Learn about value at risk and conditional value at risk and how both models interpret the tail ends of an investment portfolio's ...
  40. What options strategies are best suited for investing in the Internet sector?

    Learn how two popular options strategies, the long straddle and the long strangle, enable investors to make money on the ...
  41. What are the main objectives of cost accounting?

    Learn about the main benefits of cost accounting systems, why they are different from financial accounting and why they are ...
  42. What is RiskMetrics in Value at Risk (VaR)?

    Learn about RiskMetrics and the value at risk (VaR) and how to calculate the VaR of an investment portfolio using some RiskMetrics ...
  43. What are some of the advantages and disadvantages of DuPont Analysis?

    Learn about the DuPont analysis financial ratio, and understand some of its primary advantages and disadvantages.
  44. What does 'Incoterms' mean in relation to Ex Works (EXW) trades?

    Learn about Incoterms rules and ex works trade agreements and the obligations of buyers and sellers under the Incoterms rules ...
  45. A New Corporate Governance Initiative In Japan

    Expectations are low that Japan can create a corporate governance climate that meets global standards, but a new initiative ...
  46. Pros & Cons Of Bond Funds Vs. Bond ETFs

    Understanding the pros and cons of bond funds and bond ETFs will help you choose the instrument that is best for building ...
  47. Disadvantages Of Stock Simulators

    Stock simulators enable one to practice trading, but they have some disadvantages that you should be aware of, before transitioning ...
  48. 6 ETFs to Fight Your Recession Jitters

    Are you worried about a recession? If so, consider these 6 ETFs.
  49. The UNG Natural Gas ETF: Best Bet or Stay Clear?

    UNG is a popular natural gas ETF, but if you're going to get involved, then you need to know the risks.
  50. How is risk priced in the market?

    Read about some of the ways risk is priced in the market in areas such as insurance, consumer goods, investment assets and ...
  51. What can cause the rate of return to be negative?

    Learn how poor company or sector performance, economic turmoil and inflation can cause the rate of return on an investment ...
  52. What is the difference between a repurchase agreement and reverse repurchase agreement?

    Learn how a repurchase agreement is a form of collateralized lending and a reverse repurchase agreement is a form of collateralized ...
  53. What percentage of a diversified portfolio should be exposed to the banking sector?

    Determine how investing style influences how much of a diversified portfolio should be dedicated to the banking sector, characterized ...
  54. Why should you invest in tangible assets?

    Read about some of the possible benefits of investing in tangible assets, such as bullion, real estate, art, collectibles ...
  55. How is risk aversion measured in Modern Portfolio Theory (MPT)?

    Find out how risk aversion is measured in modern portfolio theory (MPT), how it is reflected in the market and how MPT treats ...
  56. Can unearned rent be considered deferred revenue?

    Learn whether unearned rent can be considered deferred revenue. Understand what accounting practices are used to account ...
  57. How do you account for changes in the market value of various fixed assets?

    Understand how to account for changes in the fair market value of a company's fixed assets. Learn what accounting methods ...
  58. How much of the asset management industry has moved from traditional managers to ...

    Learn about the growth of the hedge fund and alternative asset management industry and the change in regulations, preferences ...
  59. The Story Behind Shake Shack's Success

    A humble Madison Square Park hot dog stand grew to become a gourmet casual food powerhouse in a classic American success ...
  60. How is compound interest taxed?

    Understand the concept of compound interest as opposed to simple interest and learn the usual tax rate at which compound ...
  61. How is perpetuity used in determining the intrinsic value of a stock?

    Learn about the basics of a perpetuity, its valuation, how it is calculated and how it is used when evaluating the intrinsic ...
  62. What role did junk bonds play in the financial crisis of 2007-08?

    Discover the role that junk bonds played in the financial crisis of 2007-2008. The main issue is that toxic housing debt ...
  63. How important are fleet sales to an automaker's business?

    Discover how fleet sales are important to an auto manufacturer's business, and see how these large volume sales of cars and ...
  64. How does systematic risk influence stock prices?

    Understand how systematic risk can influence the prices of stocks and how strategic asset allocation can help reduce systemic ...
  65. How do interest rates impact risk aversion in the market?

    Learn why interest rates and risk aversion have an endogenous relationship in the market, and why interest rates play such ...
  66. Where And How Should You Make Your First Trade?

    New traders should enter markets that offer the greatest opportunity for learning their craft while keeping risk at a minimum. ...
  67. Bucking The Trend With Pattern Failure Strategies

    The best trade could be in the opposite direction when a classic price pattern doesn't behave according to ideal rules.
  68. Can The U.S Close Its Trade Deficit?

    The stronger dollar could have increased the U.S. trade deficit. Instead, economic growth issues abroad and falling oil prices ...
  69. Are Low-Risk High-Yield Investments Real?

    Risk and reward necessarily move in the same direction. Or do they? Is it possible to defy logic and earn great returns while ...
  70. How Janus Capital Makes Money

    Before investing in Janus, it is prudent to understand how it makes money and what costs detract from shareholder wealth.
  71. Countries Where Bitcoin Is Legal & Illegal

    Although bitcoin has been in existence for five years, most countries still do not have consistent laws regulating the cryptocurrency. ...
  72. High-Frequency Trading Regulations

    Current regulations on high-frequency trading, and possible future ones. How some people think high-frequency trading should ...
  73. Private Equity's Returns Are Tempered By Its Risks

    Private equity firms adopt approaches to quickly hike up earnings and boost returns, but these investments come with big ...
  74. Why Cash Management Is Key To Business Success

    Businesses need to generate a healthy cash flow to survive, but not hold too much so that inventory suffers or investment ...
  75. What are the differences between Ex Works (EXW) and Free On Board (FOB)?

    Learn about Ex Works and Free on Board, the main difference between these Incoterms, and the responsibilities of buyers and ...
  76. What information should I focus on in my mutual fund's prospectus?

    Understand what information investors can find in a mutual fund prospectus and what they should focus on when reviewing the ...
  77. What warning signs should an investor look for when reading an automaker's sales ...

    Discover the warning signs that investors need to pay attention to in sales reports for automakers. Monthly sales, deliveries ...
  78. What role did securitization play in the U.S. subprime mortgage crisis?

    Learn how the securitization of sub-prime mortgages into asset-backed securities fueled the real estate market crash in 2 ...
  79. What impact will growth in the emerging markets have on automotive sector?

    Learn about the automotive industry in emerging market nations and the prospects for growth in the auto industry in these ...
  80. Why is reconciliation important in accounting?

    Learn about accounting reconciliation and its importance for individuals and businesses to help prevent fraudulent activity ...
  81. Which asset classes are the most risky?

    Understand why equities and real estate are the two riskiest asset classes, though they also provide the greatest potential ...
  82. How does the Fair Accounting Standards Board (FASB) regulate deferred tax liabilities?

    Learn about the treatment of deferred tax liabilities under the requirements set forth by the Financial Accounting Standards ...
  83. How do standby letters of credit help facilitate international trade?

    Find out how standby letters of credit can help facilitate international trade by providing an incentive for banks to vouch ...
  84. Why do some investors believe that unsystematic risk is not relevant?

    Read about a stock market theory that suggests that unsystematic risks are rendered irrelevant through widespread portfolio ...
  85. Fight Volatility and Inflation with Infrastructure

    As institutional investors flock to infrastructure assets there's good reason for retail investors to follow suit.
  86. Investing in Starbucks: Stock vs. Franchise

    A look at the pros and cons of investing in Starbucks stock or a franchise.
  87. Are These the Top Dividend Stocks of 2015?

    These dividend-paying companies offer a lot more than just dividends.
  88. Is Amazon a Prime Pick for Your Portfolio?

    Eyeing Amazon? Thanks to innovation and diversification, it has high odds of being a long-term winner. Here's why.
  89. The 10 Biggest REITs in the U.S.: Dos and Don'ts

    Five of these REITs may offer potential over the next 1-3 years. Be careful with the other half.
  90. Should GE Be Part of Your Portfolio?

    Here's what you need to consider if you are thinking of adding GE to your portfolio.
  91. Should You 'Like' Facebook in Your Portfolio?

    When it comes to your portfolio should you like Facebook?
  92. The World's 10 Most Famous Traders Of All Time

    A review of the most famous and infamous traders in history.
  93. What types of companies are in the automotive sector besides auto manufacturers?

    Explore the relationships between automobile manufacturers and the numerous other types of companies that work in the automotive ...
  94. How can I get a free mutual fund prospectus?

    Obtain a free copy of a mutual fund prospectus from the dealer or use one of these online resources to download an electronic ...
  95. How is the interest rate on a treasury bond determined?

    Explore the difference between interest rates and bond coupons, what determines current yield on debt instruments, and why ...
  96. What cost basis reporting rules are set by the Internal Revenue Service (IRS)?

    Read about the cost basis reporting regulations imposed by the Internal Revenue Service and some options available to individual ...
  97. What other sectors are most highly correlated with the aerospace sector?

    Learn about the aerospace industry and two closely related industries that share many of the same characteristics. Discover ...
  98. What is the best way to get exposure to electric cars when investing in the automotive ...

    Learn more about the electric vehicle industry and what investment opportunities are available among auto manufacturers and ...
  99. Why should a company buy back shares it feels are undervalued instead of redeeming ...

    Discover the difference between common stock and preferred stock. When is repurchase preferable to redemption, and what factors ...
  100. How do you interpret the magnitude of the covariance between two variables?

    Learn more about covariance and how financial planners and economists use the concept. Explore an example of covariance in ...
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Frequently Asked Questions
  1. What techniques are most useful for hedging exposure to the banking sector?

    Learn how investors hedge exposure to the banking sector by investing in more aggressive sectors and also by investing in ...
  2. How do I find the information needed for input into the Dividend Discount Model (DDM)?

    Learn where analysts and investors can find the three pieces of necessary information that allow them to calculate the dividend ...
  3. What does the Dividend Discount Model (DDM) show an investor about a company?

    Discover the purpose of the dividend discount model, or DDM, of stock analysis and what it specifically aims to evaluate ...
  4. What is the variance/covariance matrix or parametric method in Value at Risk (VaR)?

    Learn about the value at risk and how to calculate the value at risk of an investment portfolio using the variance-covariance, ...
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