Investing - All Content

  1. Where do companies keep their cash?

    If you have ever looked over a company's balance sheet, you have no doubt noticed the first account under the current asset ...
  2. What is the difference between a zero-coupon bond and a regular bond?

    The difference between a zero-coupon bond and a regular bond is that a zero-coupon bond does not pay coupons, or interest ...
  3. How does a stock split affect cash dividends?

    When a company decides to issue a stock split (or stock dividend), a couple of possibilities could occur concerning what ...
  4. I would like to invest in a dividend-paying stock. How can I find out which stocks ...

    There are several accessible sources to help investors identify dividend-paying stocks. Here are a few we can recommend: ...
  5. How does a credit crunch occur?

    A credit crunch occurs when there is a lack of funds available in the credit market, making it difficult for borrowers to ...
  6. How can I find out if a company I like is included in an index?

    There are a few ways to find out what indexes a company is involved in, and investors should take note of them when they ...
  7. How does pyramiding work?

    Pyramiding is a method of increasing margin by using unrealized returns from successful trades. Pyramiding works by surrendering ...
  8. Calculate the total return of the municipal bond described below.

    Jane and Fabbio Salvatore have just discovered that a Fabulous Florence municipal bond will be offered to support a bridge ...
  9. Keeping An Eye On The Activities Of Insiders And Institutions

    These transactions reveal much about a stock. We go over what to consider and where to find it.
  10. Triple Screen Trading System - Part 7

    This system identifies the intraday price movements that indicates entry points for your buy or sell orders.
  11. A Logical Method Of Stop Placement

    If holding on to losing trades is human nature, this tool will help protect you from yourself.
  12. Terrorism's Effects On Wall Street

    Terrorist activity tends to have a negative impact on the markets. Find out how to take cover.
  13. Sympathy Sell-Off: An Investor's Guide

    Find out how to tell whether your stock is a bargain or a bank breaker.
  14. Investment Clubs Pool Assets, Expertise

    Forming a network of other like-minded investors and professionals can bolster returns.
  15. Mechanical Investing Not A Golden Key

    Direct paths to wealth are getting narrower, fewer and may be locked up tight.
  16. From The Printing Press To The Internet

    Find out how this invention contributed to the development and evolution of the U.S. economy.
  17. Due Diligence In 10 Easy Steps

    Got a hot stock tip? Follow up on it with these tips to avoid getting burned.
  18. Spotlight On The Solar Industry

    Before you buy into the hype, learn how the industry works and how to spot the winners.
  19. Common Risks That Can Ruin Your Retirement

    These unexpected bumps can sideline your post-work plans and prevent you from riding out your assets.
  20. Socially Responsible Investing Vs. Sin Stocks

    Can your principles make you richer or poorer? Find out if it pays pick your portfolio based on ethics.
  21. What is the incentive to buy a stock without dividends?

    While dividends are the only direct income (money paid out), the total return of holding, a stock is the dividend plus the ...
  22. What is a wrap account and what are the advantages of using one?

    Wrap accounts, in which brokerage account costs are "wrapped" into a single or fixed fee, are great if you don't have time ...
  23. What is mutual fund timing, and why is it so bad?

    Timing is the practice whereby traders try to profit from the short-term differences between daily closing prices. This is ...
  24. What are unrealized gains and losses?

    An unrealized loss occurs when a stock decreases after an investor buys it, but he or she has yet to sell it. If a large ...
  25. Is a company allowed to reduce its dividends?

    Yes. Companies have no restrictions - not from their exchange (NYSE, Nasdaq, AMEX, etc.), the SEC or the NASD - that require ...
  26. Which option is better on a mutual fund: a growth option or a dividend reinvestment ...

    When selecting a mutual fund, an investor has to make an almost endless number of choices. Among the more confusing decisions ...
  27. How do stock splits affect short sellers?

    The simple answer to this question is that stock splits do not affect short sellers in a material way. There are some changes ...
  28. If one of your stocks splits, doesn't that make it a better investment? If one of ...

    Unfortunately, no. To understand why this is the case, let's review the mechanics of a stock split.Basically, companies choose ...
  29. What is the difference between a company's book value per share and its intrinsic ...

    Book value and intrinsic value are two ways to measure the value of a company.In simple terms, book value is based on the ...
  30. I want to invest in equities, but I don't have much money. Is there a minimum number ...

    The short answer is "no" - you can buy a single share of any publicly traded company if you want to. Thus, if you have a ...
  31. Would a slow stochastic be effective in day trading?

    Given the hundreds of indicators that are available to traders, finding the appropriate technical tools to use in day trading ...
  32. Is tracking error a significant measure for determining ex-post risk?

    Before we answer your question, let's first define tracking error and ex-post risk. Tracking error refers to the amount by ...
  33. Why would a stock that pays a large, consistent dividend have less price volatility ...

    To understand the differences in volatility commonly seen in the stock market, we first need to take a clear look at exactly ...
  34. What is property, plant and equipment, and what does it mean?

    Property, plant and equipment (PP&E) is a term that describes an account on the balance sheet. The PP&E account is ...
  35. Why do futures' prices converge upon spot prices during the delivery month?

    It's a fairly safe bet that as the delivery month of a futures contract approaches, the future's price will generally inch ...
  36. How does a person gain from an investment?

    There are two main ways in which a person gains from an investment. The first is by capital gains, the difference between ...
  37. How can I use market breadth to my advantage?

    Market breadth is a study that compares the number of companies on a given exchange that have created new 52-week highs to ...
  38. Are mutual fund performance numbers reported net of fees (operating expenses and ...

    The answer depends on how you define "operating expenses."Let's look at a cinematic metaphor to clear up this apparent ambiguity. ...
  39. How do I calculate the percentage gain or loss for my portfolio when all of the stocks ...

    Finding the total percentage gain or loss on a portfolio requires a few simple calculations. First, you should understand ...
  40. What are green investments?

    Green investments are traditional investment vehicles (such as stocks, exchange-traded funds and mutual funds) in which the ...
  41. What is a Bermuda swaption?

    The Bermuda swaption refers to a modified American style of option. A swaption is an option on an interest rate swap in which ...
  42. Spotting Cash Cows

    We show you why some of these companies stand apart from the herd.
  43. Triple Screen Trading System - Part 8

    Making use of the tightest stops in entering and exiting positions is what this three-part system is all about.
  44. Anticipate Trends To Find Profits

    Monitoring your trades in real-time can help you anticipate their outcomes.
  45. Capital Gains Tax Cuts For Middle Income Investors

    Find out how TIPRA plans to slash taxes for those in the 10-15% tax bracket.
  46. Reining In CEO Rewards

    Could bloated CEO compensation be to blame for the widening gap between the rich and the ultra-rich?
  47. The History Of Information Machines

    Discover how technology changed the way we exchange information when trading.
  48. How Will The Subprime Mess Impact You?

    The subprime collapse could mean doom and gloom for housing, equities and the overall economy.
  49. Five Companies Leading The Green Charge

    Corporations that reduce their environmental footprint anticipate large long-term gains.
  50. Rate Freeze To Cool Mortgage Meltdown

    The U.S. government is offering help to subprime borrowers. Is this a cure or a curse?
  51. Bond Yield Curve Holds Predictive Powers

    This measure can shed light on future economic activity, inflation levels and interest rates.
  52. Why Warren Buffett Envies You

    The Oracle of Omaha can move over - there's a new investor in town.
  53. The Impact Of Recession On Businesses

    Find out how this economic cycle affects both small and big business.
  54. The Risks Of Mortgage-Backed Securities

    Find out how weighted average life guards against prepayment risk.
  55. An Introduction To Canadian Income Trusts

    Yields in excess of 10% aren't rare, but these unique investments need to be chosen very carefully.
  56. Mark-To-Market Mayhem

    Did this accounting convention contribute to the credit crisis of 2008? Find out here.
  57. The 2007-08 Financial Crisis In Review

    If you don't know how the recession began, read on to learn more.
  58. What is accrued interest, and why do I have to pay it when I buy a bond?

    A bond represents a debt obligation whereby the owner (the lender) receives compensation in the form of interest payments. ...
  59. Are my investments insured?

    No. Whenever you invest in a stock, bond or mutual fund, there is no insurance against the possible loss of your initial ...
  60. Why are the bid prices of T-bills higher than the ask prices? Aren't bids supposed ...

    Yes, you are correct that the ask price of a security should typically be higher than the bid price. This is because people ...
  61. What is a DRIP?

    The word "DRIP" is an acronym for "dividend reinvestment plan", but "DRIP" also happens to describe the way the plan works. ...
  62. How can you lose more money than you invest shorting a stock? If you have no money ...

    The simple answer to this question is that there is no limit to the amount of money you can lose in a short sale. This means ...
  63. Why are some shares priced in the hundreds or thousands of dollars, while other just ...

    The answer can be found in stock splits - or rather, a lack thereof. The vast majority of public companies opt to use stock ...
  64. Can investment real estate be purchased within an IRA and, if so, are there any pitfalls?

    Investment real estate can be purchased with an IRA provided the investment does not violate the prohibited transaction rules.An ...
  65. Should I buy options that are in the money or out of the money?

    Choosing which specific option to buy can often be a complicated process, and there are literally hundreds of optionable ...
  66. Is a Canadian resident allowed to participate in a direct stock purchase plan from ...

    There is no law that prevents Canadians from participating in direct stock purchase plans offered by U.S. companies. There ...
  67. If different bond markets use different day-count conventions, how do I know which ...

    A day-count convention is a system used in the bond markets to determine the number of days between two coupon dates. This ...
  68. What is the difference between hedging and speculation?

    Hedging involves taking an offsetting position in a derivative in order to balance any gains and losses to the underlying ...
  69. What happens if a company doesn't think it will collect on some of its receivables?

    The accounts receivable account, or receivables for short, is created when a company extends credit to a customer based on ...
  70. Are ETFs subject to the short sale uptick rule?

    Mutual fund use and development has increased rapidly ever since they were first introduced in the early 1920s. In the United ...
  71. Are eurodollars related to the currency called the euro?

    Eurodollars have little to do with the official currency of the European Union, the euro (EUR). In 1999, the euro was implemented ...
  72. Where do investors tend to put their money in a bear market?

    A bearish market is traditionally defined as a period of negative returns in the broader market to the magnitude of between ...
  73. Can I sell mutual fund shares below their minimum intial purchase amount without ...

    Yes. You can freely buy and sell shares of a mutual fund regardless of any requirement for a minimal initial purchase amount ...
  74. Who bears the risk of bad debts in securitization?

    Bad debts arise when borrowers default on their loans. This is one of the primary risks associated with securitized assets, ...
  75. Is there a difference between socially responsible investing (SRI) and green investing?

    There isn't a huge difference between socially responsible investing (SRI) and green investing; green investing is actually ...
  76. The Short And Distort: Stock Manipulation In A Bear Market

    High-quality stock reports needn't be confused with stock manipulators' dramatic claims.
  77. Volatility Index Uncovers Market Bottoms

    VIX can gauge when the market has hit bottom - a welcome sign of better things to come.
  78. Relative Strength Index And Its Failure-Swing Points

    Confirm your buy and sell signals with this oscillator categorized as an overbought/oversold index.
  79. Sell Growth Stocks The IBD Way

    Savvy investing is all about learning some smart rules and sticking to them. We give you the rundown.
  80. Side-By-Side Management May Favor Hedge Over Mutual Funds

    Having your firm handle both investments can spell disaster for your returns.
  81. Peer Comparison Uncovers Undervalued Stocks

    Learn how to put one of the top equity analysis tools to work for you.
  82. Surf's Up With Filtered Waves

    With an appropriate filter, you can ride the waters to rising profits.
  83. Trading Systems: Run With The Herd Or Be A Lone Wolf?

    Find out if taking the path less traveled will work in your favor - or against it.
  84. Investment Suitability 101

    This a fundamental concept from both a legal and practical perspective.
  85. Targeted-Distribution Funds May Crack Nest Eggs

    These funds can help replace an employer pension, but you have to know the risks.
  86. Payment Option ARMs: A Ticking Time Bomb?

    With these mortgages the loan's principal can continue to increase - even as payments are made.
  87. Buy High And Sell Low With Relative Strength

    The RS strategy seems counterintuitive, but there is evidence to show that it works.
  88. Could Your Company Be A Target For Activist Investors?

    Find out why certain companies are targeted by these investors.
  89. The Globalization Of Financial Services

    The key to survival for many financial institutions will be to efficiently serve a global customer base.
  90. Questioning The Virtue Of A Short Sale

    This controversial strategy is blamed for making and breaking markets. Read on to learn more.
  91. Bear Spray For Your 401(k)

    You can defend your retirement savings from the ravages of a bear market. We'll show you how.
  92. Take Control With Investing Absolutes

    Uncover the three things most good stocks have in common: performance, profitability and value.
  93. What's the difference between a mutual fund and a hedge fund?

    These two types of investment products have their similarities and differences. First, the similarities: Both mutual funds ...
  94. What is the difference between fundamental and technical analysis?

    These terms refer to two different stock-picking methodologies used for researching and forecasting the future growth trends ...
  95. How does somebody make money short selling?

    Short selling is a fairly simple concept: you borrow a stock, sell the stock and then buy the stock back to return it to ...
  96. What is late-day trading? Why is it any different from buying and selling stocks ...

    Late-day trading is the illegal buying and selling of mutual funds after regular market hours. This practice is wrongful ...
  97. Why can you short sell an ETF but not an index fund?

    To answer this question, we should first define exactly what an index fund is. An index fund is a mutual fund, or a basket ...
  98. How can I buy an S&P 500 fund?

    In 1976, Vanguard introduced individual investors to the first mutual fund designed to mimic the S&P 500 Index. Today ...
  99. What is the difference between options and futures?

    The main fundamental difference between options and futures lies in the obligations they put on their buyers and sellers. ...
  100. Why do you need a margin account to short sell stocks?

    The reason that margin accounts and only margin accounts can be used to short sell stocks has to do with Regulation T, a ...
Frequently Asked Questions
  1. What is the formula for calculating the current ratio?

    Find out how to calculate the current ratio and what that result can tell you about a potential investment.
  2. Why do share prices fall after a company has a secondary offering?

    The best way to answer this question is to provide a simple illustration of what happens when a company increases the number ...
  3. What is the difference between arbitrage and speculation?

    Arbitrage and speculation are very different strategies. Arbitrage involves the simultaneous buying and selling of an asset ...
  4. What are the generally accepted accounting principles for inventory reserves?

    As with most matters related to generally accepted accounting principles (GAAP), accountants assigned with the task of applying ...
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