Investing - All Content

  1. What is the difference between amortization and depreciation?

    Because very few assets last forever, one of the main principles of accrual accounting requires that an asset's cost be proportionally ...
  2. How does the required rate of return affect the price of a stock, in terms of the ...

    First, a quick review: the required rate of return is defined as the return, expressed as a percentage, that an investor ...
  3. Can someone who is not yet of legal age open a brokerage account?

    An underage person cannot open a brokerage account on his or her own. However, it is possible for an underage person to have ...
  4. Can investors short sell pink sheet or over-the-counter stocks?

    Short selling is an effective trading strategy that can be employed to hedge the risk of a loss on an off-setting position ...
  5. Does a strong trend (ADX > = 40) cause an increase in volatility?

    In technical analysis, there have been numerous indicators invented for identifying trends. One of the most common of these ...
  6. How do I avoid paying excess taxes on securities I have sold?

    If you dispose of securities during the tax year, the profit or losses from the transaction are either capital gains or losses. ...
  7. 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 ...
  8. 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 ...
  9. Are all bank accounts insured by the FDIC?

    The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects you against ...
  10. Can a company declare a dividend that exceeds its earnings per share?

    Yes, it can. In fact, many well-known Fortune 500 companies have paid dividends in years where they posted negative earnings ...
  11. Divergences, Momentum And Rate Of Change

    Divergences may signal a change in market direction, but traders must also identify the speed of that change.
  12. Tax Relief For Katrina Victims

    Find out if you qualify for the assistance offered to hurricane survivors by the U.S. government.
  13. Mad Money ... Mad Market?

    Jim Cramer's spirited recommendations are a case study in irrational market behavior.
  14. The Pros And Cons Of Institutional Ownership

    These big players can both create and destroy value for shareholders.
  15. Investment Clubs Pool Assets, Expertise

    Forming a network of other like-minded investors and professionals can bolster returns.
  16. Has Your Fund Manager Been Through A Bear Market?

    How to find a portfolio that will survive when the bulls stop charging.
  17. Basel II Accord To Guard Against Financial Shocks

    Problems with the original accord became evident during the subprime crisis in 2007.
  18. Fatal Seduction Of The Municipal Bond Insurers

    Learn how a foray into CDOs and other exotic products ruined an industry's image.
  19. Stocks Are No.1

    Historically, stocks provide the highest returns - but only under certain conditions.
  20. The Lost Decade: Lessons From Japan's Real Estate Crisis

    Find out what America can learn from Japan's liquidity trap and credit crunch.
  21. World's Wackiest Stock Indicators

    Can butter production help you predict the market's next move? Find out here.
  22. Questioning The Virtue Of A Short Sale

    This controversial strategy is blamed for making and breaking markets. Read on to learn more.
  23. Handicap The Market, Rack Up Gains

    Investing on Wall Street and gambling on The Strip are not as different as they may seem.
  24. What's the difference between "top-down" and "bottom-up" investing?

    Before we look at the differences between top-down and bottom-up investing, we should make it clear that both of these approaches ...
  25. Why don't investors buy stock just before the dividend date and sell right afterwards?

    Many years ago, unscrupulous brokers would use the same logic on their clients as a sleazy sales tactic. These brokers would ...
  26. Why would a stock have no par value?

    People often get confused when they read about the "par value" for a stock. One reason for this is that the term has slightly ...
  27. How do you find out the price of a mutual fund?

    The easiest way to find out the price of a mutual fund is to look at its net asset value (NAV). NAV is the total value of ...
  28. 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 ...
  29. If I buy a $1,000 bond with a coupon of 10% and a maturity in 10 years, will I receive ...

    Simply put: yes, you will. The beauty of a fixed-income security is that the investor can expect to receive a certain amount ...
  30. What are "I Bonds" and how can I buy them?

    The term "I Bond" is industry lingo for inflation-linked savings bonds issued by the U.S. Treasury. You've probably heard ...
  31. What happens when the lender of the borrowed shares in a short sale transaction wants ...

    In a short sale transaction, shares are borrowed from the lender by the short seller and sold in the market. The lender of ...
  32. What does the law say about non-U.S. citizens buying stocks of U.S. companies? Are ...

    The law is very fuzzy on the matter of who may own U.S. securities and for what purpose. The U.S. follows the common law ...
  33. What is a spider and why should I buy one?

    The term spider is the commonly-used expression to describe the the Standard & Poor's Depository Receipt (SPDR). This ...
  34. My brokerage firm won't allow naked option positions. What does this mean?

    A naked position refers to a situation in which a trader sells an option contract without holding a position in the underlying ...
  35. Does issuing preferred shares offer a tax advantage for corporations?

    There is no direct tax advantage to the issuing of preferred shares when compared to other forms of financing such as common ...
  36. What are the disadvantages of using net present value as an investment criterion?

    While net present value (NPV) calculations are useful when you are valuing investment opportunities, the process is by no ...
  37. Why would my stock's value decline despite good news being released?

    More often than not, when a firm releases an earnings report the market will react to this news by adjusting the firm's stock ...
  38. Is it possible to lose all of your investment in an index fund?

    There are few certainties in the financial world, but we can say that there is almost zero chance that any index fund could ...
  39. If a company moves its dividend record date forward, does the ex-dividend date change ...

    When a dividend is declared, there are three important dates for investors: the dividend payable date, the dividend date ...
  40. If an employee is paid by commission, who is responsible for withholding taxes?

    It depends. An individual who receives commissions can be treated in the same manner as an individual who receives straight ...
  41. I sold my house. Can I exclude the gain from my income?

    Generally, you are required to include the gain from the sale of your home in your taxable income. However, if the gain is ...
  42. 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, ...
  43. What is socially responsible investing?

    In the financial world, where profit and return are often the priorities of the average investor, the vehicles we use to ...
  44. Can I match a fund to my religion?

    Specialized mutual funds offer investments tailored for particular religions including Judeo-Christian faiths and Islam. ...
  45. What does negative shareholder equity on a balance sheet mean?

    Negative shareholder equity could show up on a company's balance sheet for a number of reasons, all of which should serve ...
  46. The P/E Ratio: A Good Market-Timing Indicator

    Check out the returns this newer technical analysis tool would've yielded over the period from 1920 to 2003.
  47. 6 Ways To Maximize The Value Of Your 401(k)

    From matching employer contributions to proper asset allocation, we'll tell you how to get the most out of your plan.
  48. Where Top Down Meets Bottoms Up

    Find the investing "sweet spot" by combining these two styles.
  49. Lead The Charge With Product Development

    If you like to keep your finger on the pulse of the market, this could be the career for you.
  50. Principal-Protected Investments: Risks, Fees And Regulations

    Discover if these instruments hit the right note for you.
  51. Get A Step Up With Credit Shelter Trusts

    Don't let unexpected taxes eat away at your inheritance or burden your heirs.
  52. Profit With Investment Policy Statements

    Defining how investments are managed and monitored can help investors meet their goals.
  53. Does It Still Pay To Invest In Gold?

    This asset's appeal dates back thousands of years. Find out whether it can live up to the hype.
  54. Corporate Takeover Defense: A Shareholder's Perspective

    Find out the strategies corporations use to protect themselves from unwanted acquisitions.
  55. Spotlight On The Solar Industry

    Before you buy into the hype, learn how the industry works and how to spot the winners.
  56. The Stock Cycle: What Goes Up Must Come Down

    Stock prices seem random, but there are repeating cycles. Learn to take advantage.
  57. Oil As An Asset: Hotelling's Theory On Price

    Not sure where oil prices are headed? This theory provides some insight.
  58. Get Technical With A CMT Certification

    Develop the skills you need to trade on your own or to become a technical analyst.
  59. What is earnings management?

    Before diving into what earnings management is, it is important to have a solid understanding of what we mean when we refer ...
  60. 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 ...
  61. 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 ...
  62. 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 ...
  63. Where can I get a company's prospectus and/or financial statements?

    These types of company documents have become increasingly accessible with the advent of the Internet. Most companies have ...
  64. Is it possible to short sell a bond?

    Because bonds, like any other security, experience market fluctuations, it is possible to short sell a bond. Short selling ...
  65. What is the difference between fast and slow stochastics in technical analysis?

    The main difference between fast and slow stochastics is summed up in one word: sensitivity. The fast stochastic is more ...
  66. Can stocks be traded on more than one exchange, such as, for example, on both the ...

    A stock can trade on any exchange on which it is listed. And to be listed it must meet all of the exchange's listing requirements ...
  67. How do I calculate how much I've gained or lost on a stock holding?

    This may seem like a fairly simple question, but it can be confusing if you fail to break it down into the proper steps. ...
  68. What is a convertible bond?

    A convertible bond is a bond issued by a corporation that, unlike a regular bond, gives the bondholder the option to trade ...
  69. What do the "BxA" numbers on my brokerage's trading screen mean?

    The letters 'B' and 'A' in the notation BxA refer to bid and ask, respectively. When you look at online stock quote data, ...
  70. How is spread calculated when trading in the forex market?

    First, remember that in the forex markets investors trade one currency for another. Therefore, currencies are quoted in terms ...
  71. How does a stop-loss order work, and what price is used to trigger the order?

    A stop-loss order, or stop order, is a type of advanced trade order that can be placed with most brokerage houses. The order ...
  72. Why are options very active when they are at the money?

    Stock options, whether they are put or call options, can become very active when they are at the money. In the money options ...
  73. What does it mean when a bond has a put option?

    A put option on a bond is a provision that allows the holder of the bond the right to force the issuer to pay back the principal ...
  74. Do all international markets trade between 9:30am and 4pm local time?

    The New York Stock Exchange and Nasdaq both trade between 9:30am and 4pm Eastern Time. All major stock exchanges trade at ...
  75. Does a company's American depositary share equal one share of common stock?

    American depositary shares (ADS) come into play when a foreign company wants its shares to trade on a major American exchange. ...
  76. Why do longer term CDs pay a higher rate than the short-term CDs?

    To address this question, let's employ the concept of distance. In the city, a short taxi ride from your hotel to a convention ...
  77. What constitutes an "intention to call a debt instrument before maturity" for tax ...

    When a bond is sold for a capital gain, the seller will face taxation on the profit. The profit from the sale will either ...
  78. How should I estimate my income from fixed sources like bonds, CDs and stocks?

    Once investors know the approximate due dates and yields of their holdings, they can do a few simple calculations in a spreadsheet ...
  79. What is Black Monday?

    Monday October 19,1987, is known as Black Monday. On that day, stockbrokers in New York, London, Hong Kong, Berlin, Tokyo ...
  80. How do I use a "basket" option?

    A basket option is an option with an underlying asset "basket" of securities, currencies or commodities. Basket options are ...
  81. Using The VIX For Shorting Opportunities

    Find out how to use this tool to identify opportunities.
  82. Triple Screen Trading System - Part 5

    Stochastics can be very effective as the second screen in this three-part system. Find out how to use this popular oscillator. ...
  83. The Importance Of Segment Data

    Key financials often fail to provide insight into large cap companies.
  84. Sales Director Career Provides Daily Challenge

    Find out what you need to do to close the deal on this investment management position.
  85. Mechanical Investing Not A Golden Key

    Direct paths to wealth are getting narrower, fewer and may be locked up tight.
  86. Building Green For Your House And Wallet

    The earth-smart money is on these environmentally friendly housing projects.
  87. The Biofuels Debate Heats Up

    Interest in these new energy sources is growing. Should you buy in?
  88. Bond Yield Curve Holds Predictive Powers

    This measure can shed light on future economic activity, inflation levels and interest rates.
  89. The Lucrative World Of Third-Party Marketing

    Hedge funds don't sell themselves. Marketing experts reel in the big fish.
  90. Top 3 Trends Affecting Private Wealth Management

    Don't miss out on high-net-worth clients because you aren't prepared for their service demands.
  91. Finding Short Candidates With Technical Analysis

    Learn how to distinguish tops and bottoms in the equity market when short selling.
  92. Benchmark To Show Winning Returns

    You can't win if you don't keep score. Read on to learn how to measure your returns.
  93. Take Control With Investing Absolutes

    Uncover the three things most good stocks have in common: performance, profitability and value.
  94. What is market capitulation?

    By definition, capitulation means to surrender or give up. In financial circles, this term is used to indicate the point ...
  95. 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. ...
  96. 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 ...
  97. 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 ...
  98. What do the phrases "sell to open", "buy to close", "buy to open", and "sell to close" ...

    The confusing terminology mentioned in the question deals with entering and exiting option orders. In review, there are two ...
  99. What is a tranche?

    "Tranche" is actually a French word meaning "slice" or "portion". In the world of investing, it is used to describe a security ...
  100. Why would a person choose a mutual fund over an individual stock?

    There are a number of reasons why an individual may choose to buy mutual funds instead of individual stocks. The most common ...
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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