Investing - All Content

  1. 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 ...
  2. What is the pitchfork indicator that I keep hearing about, and how do I use it?

    The technical indicator known as Andrew's Pitchfork is not that well-known, and it's rarely used by novice traders. However, ...
  3. What's the difference between net present value and internal rate of return? How ...

    Both of these measurements are primarily used in capital budgeting, the process by which companies determine whether a new ...
  4. What is an economic moat?

    The term economic moat, coined and popularized by Warren Buffett, refers to a business' ability to maintain competitive advantages ...
  5. What's the difference between institutional and non-institutional investors?

    There are a number of differences between institutional investors and non-institutional investors. If you are considering ...
  6. 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 ...
  7. What is the difference between municipal bonds and standard money market funds?

    The primary difference between municipal bonds - also known as "munis" - and money market funds is that municipal bonds are ...
  8. Can a corporation deduct dividend payments to shareholders before taxes are calculated?

    Corporations may not legally deduct the dividend payments before taxes but there is another approach - a corporate structure ...
  9. How are futures used to hedge a position?

    Futures contracts are one of the most common derivatives used to hedge risk. A futures contract is as an arrangement between ...
  10. Why do companies issue 100-year bonds?

    Although it is rare, companies do issue bonds that exceed an average person's life expectancy. For example, multi-billion ...
  11. What happens when a circuit breaker is put into effect?

    A circuit breaker represents a situation where the Securities and Exchange Commission (SEC) and National Association of Securities ...
  12. How is margin interest calculated?

    Before running a calculation you must first find out what rate your broker-dealer is charging to borrow money. The broker ...
  13. How can I prevent commissions and fees from eating up my trading profits?

    First off, understand that there is no universal system regarding trading commissions charged by brokerage firms. Some charge ...
  14. What is foreclosure investing?

    Foreclosure investing involves the purchase of houses that are somewhere in the process of being confiscated by lenders due ...
  15. When is a dividend payment recognized in the shareholders equity portion of the balance ...

    From an accounting point of view, shareholders' equity is decreased by the total dividend amount on the date it is declared ...
  16. World's Greatest Investors

    Historically, the market has returned a solid 12% per year on average. The icons we'll present here represent the pinnacle ...
  17. Trader's Corner: Finding The Magic Mix Of Fundamentals And Technicals

    For a record-holding stock trader, CANSLIM is the formula that identifies this magic mix.
  18. Fatal Seduction Of The Municipal Bond Insurers

    Learn how a foray into CDOs and other exotic products ruined an industry's image.
  19. The Evolution Of Enterprise Risk Management

    This growing sector can tell you a lot about the companies you are investing in.
  20. Overseas Investing No Protection Against Downturn

    The U.S. economy affects many other countries. Find out what this can mean for overseas investments.
  21. The Basics Of Game Theory

    Break down and examine the potential consequences of economic/financial scenarios.
  22. Biggest Merger and Acquisition Disasters

    Find out which companies collapsed after merging.
  23. Do Adaptive Moving Averages Lead To Better Results?

    These complex indicators can help traders interpret trend changes, but are they too good to be true?
  24. Tic-Tac-Toeing Your Way To Better Returns

    Point-and-figure charts eliminate the noise surrounding a stock to help you determine where it's headed.
  25. The Wall Street Animal Farm: Getting To Know The Lingo

    Finance professionals speak a different language, but the terms they use are more familiar than you think.
  26. Do I receive the posted dividend yield every quarter?

    First things first: a company with common stock that pays a dividend will typically distribute the dividend every quarter. ...
  27. Where can I find the P/E ratios for the Dow and S&P 500?

    When it comes to valuing stocks, the price-to-earnings (P/E) ratio is one of the oldest and most frequently used metrics. ...
  28. What is the difference between a global fund and an international fund?

    In the English language, "global" and "international" tend to be used interchangeably - hence the confusion in the investing ...
  29. Why do interest rates tend to have an inverse relationship with bond prices?

    At first glance, the inverse relationship between interest rates and bond prices seems somewhat illogical, but upon closer ...
  30. What is the difference between yield and return?

    Because investors are very concerned with how well their investments are performing or how they are expected to perform, ...
  31. Are IPOs available to short sell immediately upon trading, or is there a time limit ...

    The quick answer to this question is that an IPO can be shorted upon initial trading, but it is not an easy thing to do at ...
  32. 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 ...
  33. 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 ...
  34. 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 ...
  35. 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 ...
  36. 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 ...
  37. 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 ...
  38. 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 ...
  39. How can I determine a stock's next resistance level or target price?

    Determining where the price of an asset will stop once it has created a new high is one of the most difficult tasks for any ...
  40. What effect does a company's dividend reinvestment plan have on its stock price? ...

    When a dividend is received, an investor has two options: to keep the proceeds in a bank account or reinvest them. For the ...
  41. What is a GTEM order?

    GTEM stands for "good 'til extended market". This is a type of duration order that investors can place with their brokers, ...
  42. Who or what are the turtles?

    The "turtles" was a nickname given to a group of traders who were a part of an experiment run by two famous commodity traders. ...
  43. What is an Islamic investment policy?

    Islamic investments are a unique form of socially responsible investments because Islam makes no division between the spiritual ...
  44. What is a trailing commission?

    Very simply, a trailing commission is money you pay an advisor each year that you own an investment. The purpose of the fee ...
  45. What is hedging as it relates to forex trading?

    When a currency trader enters into a trade with the intent of protecting an existing or anticipated position from an unwanted ...
  46. What causes a recession?

    According to the National Bureau of Economic Research (NBER), recession is defined as "a significant decline in economic ...
  47. 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 ...
  48. 10 Insurance Tips For Homeowners

    Here are ten ways to make sure you get the right home insurance coverage and compensation for your property.
  49. The Advantage Of Intermarket Analysis

    Analyzing a variety of markets around the world can provide powerful insight into trading opportunities.
  50. Profiting From The Bollinger Squeeze

    Learn how Bollinger's "squeeze" can help you determine breakout direction.
  51. Tax Relief For Katrina Victims

    Find out if you qualify for the assistance offered to hurricane survivors by the U.S. government.
  52. Cut Your Tax Bill

    Paying your bills early or giving an extra donation now can help you come tax time.
  53. Is That Airline Ready For Lift-Off?

    Break through the clouds to see if these stocks will rocket higher, or crash and burn.
  54. Gauging Major Turns With Psychology

    Knowing what the market is thinking is the best way to determine what it will do next.
  55. The Buy-Side Of The M&A Process

    With almost $2 trillion in sales yearly, find out how these mergers and acquisitions take place.
  56. Active Share Measures Active Management

    A 2006 study proves the effectiveness of a new way of sizing up your portfolio manager.
  57. Investment Services Stump Investors

    What you're getting isn't easy to determine. Find out how to get your money's worth.
  58. Value Investing Using The Enterprise Multiple

    This simple measure can help investors determine whether a stock is a good deal.
  59. 10 Steps To Retire A Millionaire

    Making this dream come true takes work, but it's well worth the effort.
  60. House Your Retirement With Self-Directed Real Estate IRAs

    Investors are now able to invest directly in real property, mortgages and other assets.
  61. What happens to the stock prices of two companies involved in an acquisition?

    When a firm acquires another entity, there usually is a predictable short-term effect on the stock price of both companies. ...
  62. What's the difference between bills, notes and bonds?

    Treasury bills (T-Bills), notes and bonds are marketable securities the U.S. government sells in order to pay off maturing ...
  63. Where can I find a company's annual report and its SEC filings?

    Thanks to the Internet, finding financial reports is easier than ever. Nowadays, every reputable company has an investor ...
  64. What is the difference between a blend fund and a balanced fund?

    As both "blend"and "balanced" describe the particular asset mix of mutual funds, determining the exact distinctions between ...
  65. What is a mutual fund's NAV?

    Net asset value (NAV) represents a fund's per share market value. This is the price at which investors buy ("bid price") ...
  66. What's the difference between a regular option and an exotic option?

    Before learning about exotic options, you should have a fairly good understanding of regular options. Both types of options ...
  67. I hold stock certificates in a company that just had a stock split. What happens ...

    The short answer is that a stock split will have little effect on the holder of stock certificates. In most cases when an ...
  68. 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. ...
  69. 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 ...
  70. 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, ...
  71. 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 ...
  72. 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 ...
  73. 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 ...
  74. 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 ...
  75. 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 ...
  76. What is a virtual trailing stop order (VTSO)?

    A virtual trailing stop order (VTSO), is a stop order that adjusts as the price of a security moves. The stop price is placed ...
  77. Why does a crisis in emerging markets cause U.S. Treasury yields to decrease?

    The reason that you will often see the yields on Treasuries fall when you see a financial crisis in an emerging or foreign ...
  78. Is it possible to buy mutual funds using a margin account?

    Because of the pricing/trading mechanisms used with mutual funds, they cannot be bought and sold like stocks. When trading ...
  79. What is a liquidity squeeze?

    A liquidity squeeze occurs when a financial event sparks concerns among financial institutions (such as banks) regarding ...
  80. 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 ...
  81. 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 ...
  82. Learn To Invest In 10 Steps

    Want to invest but don't know where to start? Learn how to make your money work for you with these tips.
  83. 10 Tips For Choosing An Online Broker

    This important investment decision happens before you pick your first stock. Find out how to get it right.
  84. Divergences, Momentum And Rate Of Change

    Divergences may signal a change in market direction, but traders must also identify the speed of that change.
  85. Five Investing Pitfalls To Avoid, According to Investor's Business Daily

    Common sense or common folly? Discover some approaches to circumventing typical stumbling blocks on the road to profitable ...
  86. Equity Premiums: Looking Back And Looking Ahead

    If stocks become less profitable in the future, you may have to change your investment strategy.
  87. Where Top Down Meets Bottoms Up

    Find the investing "sweet spot" by combining these two styles.
  88. Eight Items That Impact Daily Trades

    Find out which factors can help you squeeze more profit out of each position.
  89. The Gatekeepers: Consultants Hold The Key

    Institutional investment consultants help match up asset managers with large institutions.
  90. Full-Service Brokerage Or DIY?

    Determine what you are getting for your fees and commissions and how to get your money's worth.
  91. A Deeper Look At Alpha

    The Jensen index helps investors compare realized returns to what should've been achieved.
  92. Bank Failure: Will Your Assets Be Protected?

    The SIPC and FDIC insure against personal financial ruin when banks or brokerages go belly up.
  93. Handicap The Market, Rack Up Gains

    Investing on Wall Street and gambling on The Strip are not as different as they may seem.
  94. 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 ...
  95. Who's in charge of managing exchange-traded funds?

    An exchange-traded fund (ETF) is a security that tracks an index but has the flexibility of trading like a stock. Just like ...
  96. What's the difference between absolute and relative return?

    Knowing whether a fund manager or broker is doing a good job can be a challenge for some investors. It's difficult to define ...
  97. What does "buy and hold" mean?

    Buy and hold refers to an investing strategy practiced favorably by passive investors (or couch-potato investors). When buying ...
  98. Can you short sell stocks that are trading below $5? My broker says that I can't.

    Short selling can be very risky for both the investor and the broker. Brokers will often tell investors that only stocks ...
  99. What is the 'Rule of 72'?

    The 'Rule of 72' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of ...
  100. What's the difference between absolute P/E ratio and relative P/E ratio?

    The simple answer to this question is that absolute P/E, which is the most quoted of the two ratios, is the price of a stock ...
Frequently Asked Questions
  1. Is the Dow Jones a stock exchange?

    Learn about the Dow Jones Industrial Average and its impact. This historically significant index provides a daily snapshot ...
  2. What does FNMA stand for?

    Learn what FNMA is, how it helps low-, moderate- and middle-income families afford a place to live using mortgage liquidity, ...
  3. What are the differences between operating expenses and cost of goods sold (COGS)?

    Discover the differences between operating expenses and cost of goods sold, how each are calculated and why they are considered ...
  4. Are stock dividends and stock splits taxed?

    Understand different tax implications for dividend payments and stock splits; main factors include the type of account and ...
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