Investing for Beginners

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    10 Ways to Invest Money

    From simple savings accounts to complex derivatives, the financial markets offer several investment choices to fit your financial objectives and tolerance for risk and volatility. However, take the time to understand and research these investment options to avoid making costly ...

    10-Year Bond vs. 20-Year Bond

    When buying bonds, longer maturities almost always give you a higher yield. However, during periods of low interest rates, buying a long-maturity bond can be risky. For a given change in market interest rates, the price on longer bonds will fluctuate more than the price on ...

    What Is a 1:50 Stock Split?

    In the investing world, companies do not give up total control of their stock shares after the initial offering. If they have no better use for free cash, they can buy back shares. This lowers the number of shares on the market (the "float") and tends to raise the ...

    30 Day Rule of Buying & Selling Stock

    The 30-day rule in the stock market -- commonly referred to as the "wash sale" rule" -- affects the taxable gains and losses on stocks you sell. The purpose of the rule is to prevent you from selling stock for a tax loss and buying it right back because you still ...

    What Is a 3-for-2 Stock Split?

    A stock split allows a company to increase the number of shares in stockholders' hands without reducing or diluting the value of anyone's stake in the company. In a 3-for-2 stock split, the company's stockholders wind up owning three shares of stock for every two shares they ...

    5 Questions to Ask When Investing

    Asking questions is part of the due diligence process of investing. You can choose from several asset classes, such as stocks and bonds, and hundreds of securities in each class. These securities will have different risk-reward characteristics. By asking the right questions, you ...

    5 Reason Stocks Drop and Rise So Much

    The stock market works as a double auction market. Buyers offer a price they are willing to pay for a particular stock, while sellers offer stock for sale at a price they are willing to take. When the bid price and the ask price match, a stock trade is made. While many factors ...

    529 vs. Stocks for Kids

    The average cost for undergraduate tuition, room and board at public institutions ballooned 37 percent between 2000 and 2010, according to the National Center for Education Statistics. Prior planning can help take some of the stress out of paying for your child or grandchild's ...

    529 vs. Traditional Investing

    The average price tag for a year at a public college or university, including tuition, room and board, was $12,804 for the 2009-2010 academic year, according to the National Center for Education Statistics. College costs at public universities rose 37 percent in the first decade ...

    How to Account for Selling Stock

    Selling stock when you want to cash in on an investment or sell before the market dips in value is a key part of a timely investing strategy. However, there's much more to selling stock than pocketing the money you receive and walking away. You'll need to account for the money ...

    Accrued Interest Vs. Compound Interest in Savings Bonds

    U.S. savings bonds provide competitive yields and allow investors to compound those earnings for many years. The accrual and compounding features of savings bonds determine when you earn interest and when you earn more interest. The interest rate policy of savings bonds makes it ...

    How to Add a Name to Stocks Owned

    A stock certificate is a legal document that serves as proof of ownership of a company's stock. Ownership can be shared with a friend, spouse or other designee by adding the name of the recipient to the stock certificate. This is a simple and straightforward process, but there ...

    How to Add a Trailing Stop After Purchasing a Stock

    A trailing stop order is a more flexible type of stop order, which becomes a market order at a specified stop price. You would set a trailing sell-stop order after purchasing a stock to maximize profits and minimize losses. The trailing stop price or trigger price adjusts by ...

    The Advantages of Bonds Over Common Stock

    Companies issue bonds and shares in common stock to raise capital. Bonds are loans from bondholders to public- and private-sector bond issuers. In return, bondholders receive fixed periodic interest payments and get the principal back on maturity. You can trade stocks and bonds ...

    The Advantages of a Call Option

    When you purchase a call option you get a contract that entitles you to buy the underlying commodity or financial instrument, such as a share of stock, at a guaranteed price called the strike price. You pay a fee called a premium for the call option, and you can exercise your ...

    Advantages and Disadvantages of Bonds

    Governments and businesses issue bonds to raise funds from investors. Bonds pay regular interest, and bond investors get the principal back on maturity. Credit-rating agencies rate bonds based on creditworthiness. Low-rated bonds must pay higher interest rates to compensate ...

    Advantages and Disadvantages of Common Stocks

    Common stocks represent part ownership of publicly traded companies. Stocks trade on regulated and over-the-counter stock exchanges worldwide. Common stocks are a key component of retirement portfolios, along with bonds and short-term money market instruments. You can buy stocks ...

    The Advantages & Disadvantages of General Obligation Bonds

    Municipal bonds can be classified as either revenue bonds or general obligation bonds. The difference relates to the sources of money used to pay interest and principal on the bonds. Revenue bonds receive money from a specific project, and general obligation bonds draw from a ...

    Advantages & Disadvantages of Ginnie Mae Bond Funds

    The Government National Mortgage Association, also known as Ginnie Mae or GNMA, is a federally owned corporation. Ginnie Mae insures investment pools that contain mortgage-backed securities to ensure investors receive interest payments in the event that borrowers default on the ...

    Advantages & Disadvantages of Money Market Accounts

    A money market account, or money market deposit account, is a government-insured bank account that pays relatively high interest rates and provides cash withdrawal privileges. This type of account offers both savings and checking tools at higher yields than regular savings and ...

    The Advantages of an Index Fund Vs. Investing in Stocks

    Index funds are mutual funds that are designed to track the performance of a particular index, such as the Dow Jones Industrial Average or the Russell 2000. Although you can buy the individual stocks that are listed on these indices, there are many advantages to investing in ...

    Advantages of Investing in the Stock Market

    Despite its popularity and presence in the news, the stock market is just one of many potential places to invest your money. Investing in stock is often risky, which draws attention to the huge gains and losses of some investors. If you manage the risks, you can take advantage ...

    The Advantages of Investing in T-Notes

    The federal government requires a steady flow of money to operate. When the government spends more money than it takes in, it has to borrow money to make up the difference. The United States Department of the Treasury borrows money from individual, institutional and government ...

    The Advantages of Leveraged Investing

    Using leverage as part of your investment strategy could help you reach your investment goals sooner. The use of leverage multiplies the gains for the same amount of money invested. The amount of leverage you can use depends on the markets in which you are investing and trading. ...

    The Advantages of Owning Precious Metals

    The range of investment products available to individual investors is greater than ever, and includes everything from ultra-conservative products like U.S. government bonds to high-risk speculations in the commodities market. Investing is an inexact science at best, and ...

    The Advantages of Reinvesting Dividends in Mutual Funds

    Mutual funds often invest in stocks that pay dividends, and you can choose to reinvest those dividends instead of receiving them as cash. In other words, you use the dividends to buy more shares in the mutual fund. Reinvesting dividends offers you several advantages that can ...

    The Advantages of Stop-Limit Vs. Limit Order

    The main types of brokerage orders are market, limit and stop orders. Market orders are executed at the best price available in the market. Limit orders are filled only at the specified limit price or better. Stop orders become market orders at the stop price. Stop-limit orders ...

    The Advantages of Thinly Traded Stocks

    Thinly traded stocks tend to go unnoticed by most investors because they are not as popular as other stocks. A stock that trades less than $10,000 worth of stock per day may be considered thinly traded by most investors, and large institutional investors may not look at a stock ...

    The Advantages of U.S. Saving Bonds

    Series EE U.S. Savings Bonds are U.S. government debt securities. When you buy a savings bond, you are lending money to the government at interest. As an investment, savings bonds compare very favorably with other low-risk debt investment options. They offer safety, a ...

    How to Find the After-Tax Return on a Marketable Security

    A marketable security is an investment that you can easily buy or sell, such as a stock or bond. Your after-tax return on a marketable security is your total profit as a percentage of the original investment amount after accounting for income taxes. You can calculate this return ...

    Agency Vs. Non-Agency Real Estate Investment Trusts

    Before the creation of real estate investment trusts, investing in real estate on a significant scale was an opportunity the average investor had little access to, unless he had the financial resources and time to be a landlord. In 1960, Congress set forth provisions for the ...

    What to Analyze on a Balance Sheet When Picking Stocks

    Balance sheets summarize assets, liabilities and shareholders' equity, which is the difference between assets and liabilities. Investors use the balance sheet and the income statement, which shows revenue and profits, and the statement of cash flow, which summarizes the cash ...

    What Is Annuity Income?

    An annuity is an investment agreement that insurance companies provide to customers. Under the contract, you make a cash deposit with the insurer. In exchange, you start receiving distributions — or annuity income — on the date the contract specifies. Generally, this ...

    Do Assets Have to Be Liquidated to Change Stock Brokers?

    In most cases, it is possible to have your current investment holdings transferred to a new broker -- no selling required. To accomplish a transfer, you must follow the established procedures. Before you initiate any brokerage account transfer, you should make yourself aware of ...

    How to Balance Investment Portfolios

    An investment portfolio consists of all of your investments in different products and sectors of the economy. A typical investment portfolio may include stocks, bonds, retirement savings accounts and other investments, such as mutual funds or certificates of deposit. Whatever ...

    Basic Concept of the Stock Market

    Investing in the stock market is among the most common ways investors attempt to grow their money, but it's also among the riskier investment options available. Understanding the basic concept of the stock market is a first step in becoming an informed investor. While the stock ...

    What if My Bearer Bond Matured 15 Years Ago?

    Bearer bonds are much like cash, in that whoever has the bond in hand has the right to collect the bond’s value when the bond matures. This differs from registered bonds, which are registered in the name of a single person or organization; only that person or organization ...

    Does Being Overbought Hurt a Stock?

    Analysts term a stock "overbought" when the stock reaches a point in trading where technical indicators suggest the next price move of the stock will be down. When a stock's price has risen too far, too fast and it is beginning to look expensive to investors, it is ...

    How Does Bid & Ask Work in Stock Trading?

    The bid price is the highest price a buyer is willing to pay for a share of stock, and the ask price is the minimum the seller is willing to accept. The ask price is usually higher than the bid price. The difference between the bid and ask prices is the bid-ask spread, which ...

    Blue Chip Stock vs. Growth Stock

    If you intend to build wealth through the stock market, you will need an understanding of the advantages and disadvantages different types of stocks offer. Blue chip and growth stocks offer completely different definitions of a revenue generating stock. Purchased in combination, ...

    Blue Chip vs. Microcap

    If you took all publicly traded companies and ranked them by size, risk profile, stock-trading volume or just about any other criteria short of alphabetical order, you'd likely find "blue chip" companies and "microcap" on completely opposite ends of the ...

    Bond Fund Vs Indexed Annuities

    Indexed annuities and bond funds are two types of income-generating investments. Broadly speaking, bond funds and annuities are regarded as conservative investment options compared with stocks and other types of instruments. Despite certain similarities, there are distinct ...

    Bond Funds vs. Online High Yield Savings Accounts

    Bond funds and online high yield savings accounts might appeal to you if you are seeking supplemental income. While both may provide you with monthly interest payments, there are substantial differences between these investments. These include the risk factors, investment yield ...

    How Do Bond Funds Work?

    Both stocks and bonds can be sound investment securities, but they are fundamentally different in nature. Stocks represent ownership in a company, while bonds represent a loan to the company in exchange for regular interest payments plus the return of the bond's face value upon ...

    Bond Ladders Vs. Bond ETFS

    A traditional method to build a bond portfolio is to buy bonds with laddered maturities. A bond ladder protects against both rising and falling interest rates. Investing in a bond ETF can provide some of the benefits of a ladder without the trouble of researching and buying ...

    Bond Par Value vs. Market Price

    A bond's par value is what the bond "says" it's worth. The market price is what you actually pay for it. Sometimes they're the same, but in most cases they're not because market prices fluctuate. Those fluctuations ensure that bondholders receive a return competitive ...

    Bond Performance During Recessions

    Recessions are broad-based declines in economic activity that last at least six months. Lower business activity leads to falling employment and retail sales, which leads to declines in corporate profits and stock prices. During periods of stock market declines, investors may ...

    What Does Bond Repricing Mean?

    Investing in bonds is generally among the safest ways to earn interest on your money. Bonds can earn more than savings accounts, and historically are more stable than stocks. This means that bonds can help to balance a portfolio or save for a specific need, such as a child's ...

    About Bond Valuations

    Just as stocks go up and down in price, so do bonds. You just don't hear as much about the bond market as you do about the stock market. The process of setting a price for a bond is called valuation. It takes into account not only the features of the bond itself, but also how ...

    Are Bonds Safe During Hyperinflation?

    The goal of any investment is to earn a monetary return -- to get more money out of the investment than you put into it. Inflation works against this goal by reducing the value of the dollars you get in your returns. In periods of hyperinflation, this effect can be great enough ...

    Why Some Bonds Sell at a Premium Over Par Value

    Bonds from thousands upon thousands of corporations and governments are constantly competing for investors' attention in the market. That competition is reflected in bond prices, which rise and fall to ensure that each bond offers a rate of return in line with that offered by ...

    Bonds vs. CD Investing

    If you're looking for a low-risk investment, either bonds or CDs might be the right way to go. Both are suitable for investors looking for a way to generate long-term savings with minimal volatility. Although some overlap exists between the two, investors should be aware of some ...

    The Bottom-Up Approach for Investing

    You might have heard investors described as having a "top-down" or "bottom-up" approach. These two terms are used to distinguish the primary focus of a given investor. Some investors take a holistic approach, surveying the health of the market in general ...

    What Is Broad Diversification?

    Broad diversification is about minimizing market and business risk by investing in several assets and asset categories. Market risk refers to volatility due to macro factors, such as policy changes and geopolitical events. Business risk refers to adverse changes in a company's ...

    What Does Bullish Mean in Stock Trading?

    Being bullish simply means you have a positive sentiment and are optimistic about making money in a market or investment in the near- or long-term. The origin of the term is unclear, but it may have been solidified in a painting by William Holbrook Beard called "The Bulls ...

    How to Buy Copper ETFs

    Exchange traded funds -- ETFs -- tracking the value of precious metals have been a big hit with investors. The idea of investing in the value of a particular metal has been expanded to cover the price of copper. The available copper tracking ETFs allow you to profit from either ...

    How to Buy a Stock Once It Reaches a Certain Price

    Investors set stock price levels to avoid buying at market peaks and selling at market troughs. Successful stock investing starts with researching companies that you understand and creating a short list of stocks for your portfolio. You can use the trailing 12-month earnings per ...

    How Does Buying Back Stock Affect Stockholders Equity?

    Companies repurchase their own shares for various reasons -- for example, to try to boost a sagging stock price, to thwart a hostile takeover or to gather up shares to distribute to employees through stock options or awards. Whatever the reason, the effect on stockholders' ...

    How to Calculate the Basis for Multiple Stock Splits

    Stock splits occur periodically and give shareholders new shares based on the number of shares they previously owned. For example, a company might do a two-for-one stock split where each shareholder gets two shares for each old share. Stock splits by themselves aren't taxable ...

    How to Calculate Compound Investments Semiannually

    Compounding can greatly increase your investment returns over time. When an investment compounds, it adds the interest it earned for a particular period to its existing balance. The next period’s interest calculation is based on the higher balance, and the interest is ...

    How to Calculate Multiple Year Holding Period Returns With Dividends

    It is important to monitor your investments’ returns to see if you are meeting your investment objectives. If you’ve held a dividend-paying stock for more than one year, you can calculate its multiple-year holding period return to gauge its performance. A holding ...

    How to Calculate Mutual Fund Percentage Returns With Distributions

    Based on the investment objectives of a particular mutual fund, dividend and capital gains distributions may represent a significant portion of the total return. The simple step of subtracting the starting share price from the ending share price will not give an accurate total ...

    How to Calculate Your Overall in Stocks

    It is important to monitor the overall amount you have invested in stocks in your portfolio to stay on track with your investment strategy. As stock prices fluctuate, the overall value of your holdings changes, which can throw your portfolio off balance. You can calculate the ...

    How to Calculate Reinvested Bond Interest

    Reinvested bond coupon payments can account for up to 80 percent of a bond's return to an investor. The exact figure depends on the interest rate earned by the reinvested payments and the amount of time until the bond matures. This amount can be calculated by tallying the ...

    How to Calculate Returns on Investments With Inflation

    When you analyze your investment returns, it is important to consider the effects of inflation, which is the increase in the prices of goods and services over time. During periods of inflation, your money’s purchasing power decreases — a dollar will buy less in the ...

    Call Options Vs. Put Options

    Options are derivative instruments based on underlying securities, such as stocks and bonds. Calls and puts are the two basic types of stock option contracts. Calls give you the right to buy the underlying shares at specified prices, known as strike prices, before predetermined ...

    Can I Cash a Savings Bond at a Bank if I Don't Have an Account There?

    The traditional place to cash a U.S. savings bond is at your bank. Almost every bank will cash Series EE and Series I bonds as a service to customers and the U.S. Treasury. To cash a bond at a bank where you do not have an account is possible within certain limitations.

    Can I Claim a Loss on the Sale of an Investment Property?

    If you sold rental or investment real estate at a loss, you may be able to deduct that loss from your taxes. If you sold your personal residence at a loss, that loss is not deductible. For the loss on the sale to be tax deductible, the real estate had to be held to produce ...

    Can I Claim the Loss on Unexercised Stock Options?

    A stock option is a contract that gives the holder the right to buy or sell a specific quantity of a stock at a particular price on or before a specific date. Options can be sold to another investor, exercised through purchase or sale of the stock or allowed to expire ...

    Can I Hedge a Call Option With a Put Option?

    Sometimes an investment has made substantial gains, but you're not ready to sell the assets just yet. At the same time, you don’t want to risk losing the profit you’ll get by cashing in immediately. When you face this dilemma with call options, you can hedge your ...

    Can I Be Issued Paper Stocks?

    The day of paper stock certificates is fading away as more and more records shift to electronic bookkeeping. Some companies no longer issue paper stock certificates. However, when you own shares in a corporation that still provides them, you can be issued paper stocks. If you ...

    Can a Money Market Account Be Qualified?

    The Internal Revenue Service affords special tax treatment to certain kinds of tax-qualified accounts. You can open a money market account with either qualified or non-qualified funds. Both qualified and non-qualified accounts are subject to banking industry withdrawal ...

    Can You Get Money for Savings Bonds the Same Day You Turn Them In?

    You must hold EE or I savings bonds at least one year before cashing them. If you redeem them before five years, the U.S. Treasury charges a penalty of three months' interest. After the one-year waiting period, you can get cash up to $1,000 in paper bonds the day you redeem ...

    Can I Redeem My Savings Bonds Online?

    If you own savings bonds in electronic form through an account with TreasuryDirect.gov, you may redeem them online. You must wait at least one year after you purchase the bonds before redeeming them. However, you forfeit three months’ interest if you redeem them in less ...

    Can There Be Futures on Individual Stocks?

    Futures for individual stocks -- called single stock futures -- are relatively unknown to the general investing and trading public. Futures on individual stocks may not provide the high visibility and fast-moving action of stock index futures trading, but this type of futures ...

    How to Cancel a Stock Trade

    Managing your stock portfolio online allows you to execute and cancel trades from the comfort of your home or office. If you want to cancel a trade, simply navigate to the location in your online trading platform that allows cancellations. Although there are many online ...

    How to Cash a Matured Bond

    If you have a matured savings bond, this means that your bond is no longer earning interest and there’s no reason to hold onto it. By putting off redeeming a mature savings bond, you allow the federal government to continue using your invested money free of charge. After ...

    How to Cash a Savings Bond in My Maiden Name

    When you’re looking for a low-risk investment that will deliver solid results, U.S. savings bonds may be the ideal vehicle. You can count on a fixed rate of return as long as you hold onto the bonds for a minimum period. The federal government knows that name changes are ...

    What Causes Instability in Investment?

    Investing money is a necessary part of most people's financial plans, whether it involves saving money in a bank account, investing for retirement or using investments to protect and grow wealth. But just as all investments provide opportunities to make money, every investment ...

    CD Vs. Savings Bond

    CDs, or certificates of deposit, and U.S. savings bonds are safe and convenient ways to invest your money and earn interest. However, there are differences regarding the amount you can invest and the terms. Your best choice depends on why you want to put the money into an ...

    How to Change Names on United States Saving Bonds

    When you own a savings bond, it shows your name as the owner on the face of the bond. If your name changes and the name on the bond is no longer current, you may need to have it reissued. The federal government requires a bond reissue if you change your name with court ...

    The Characteristics of a Positive Investment Climate

    A positive investment climate is a necessary element for fostering investor confidence. In a world where billions of dollars can move in and out of financial assets in a short period, countries often have to compete with one another for limited investment dollars. The country ...

    How to Check the Balance on a Treasury Savings Bond

    When you’re looking for a low-risk investment, consider a U.S. savings bond. While you hold the bonds, they accrue interest at competitive rates. The Treasury Department places minimum requirements for how long you must hold savings bonds before redeeming them. You can ...

    Checklist for Investment in a Foreign Country

    Foreign investments offer diversification and growth opportunities. Investing in foreign stocks spreads investment risk among countries with different economies and growth characteristics. Some suggest that foreign countries, particularly those in Asia and Latin America, offer ...

    How to Close a Diagonal Options Spread

    A diagonal options spread involves selling options contracts with near-term expiration dates, and then buying the same number of contracts with later expiration dates at a different strike price. The contracts for both legs -- sold and bought -- will be the same type -- puts or ...

    Do Common Stock Shares Earn Dividends?

    If you own shares of a company's common stock and that company announces that it will pay a dividend to its shareholders, then you will receive the dividend. However, holders of common stock are not necessarily guaranteed a dividend. The company can simply choose not to pay any ...

    Common Stock vs. Preferred Stock

    Corporate stock represents an ownership stake in a company. Common stock and preferred stock are the two most common forms of corporate ownership. Although every stock corporation issues common stock, only some issue preferred stock. Preferred stock is subject to special terms ...

    How to Compare Market Capitalization & Stockholders' Equity

    Market capitalization, or market cap, is the market value of all of a company’s common stock. Stockholders’ equity, which is also known as book value, is the accounting value of the claim stockholders have on a company’s assets. A company reports ...

    Components of a Statement of Shareholders' Equity

    Shareholders’ equity is the amount left over when you subtract a company’s liabilities from its assets. The statement of shareholders’ equity summarizes equity transactions and their resulting effects on shareholders’ equity over a given accounting ...

    How to Compute Earnings per Share Using Financial Statements

    Earnings per share, or EPS, is one of the most important numbers investors and analysts use to gauge a company’s performance. EPS states the amount of profit a company generates during an accounting period for every share of common stock it has outstanding. A growing EPS ...

    What Constitutes an Investment Activity?

    Individuals, corporations and governments all engage in investing to make money. There are many different avenues to investment, each with its own degree of risk and chance to pay off. As a result, investment activity takes many forms, all of which can have important effects on ...

    What Are the Contingent Value Rights in a Stock?

    A company undergoing reorganization or acquired by a second company may offer the existing shareholders of the target company contingent value rights, commonly referred to as CVR. These rights are an additional benefit that the existing shareholders will receive if a particular ...

    How to Convert a Bond Equivalent Yield to a Monthly Equivalent Yield

    Certain investments, such as mortgage-backed securities, pay you monthly interest. When analyzing this type of investment, you can compare its yield, or return, to the yield on a U.S. Treasury bond, which pays interest semiannually. A Treasury bond’s bond-equivalent yield ...

    How to Convert Bond Price to Yield

    A bond’s interest payments are based on its annual interest rate, or coupon rate, and its face, or par, value. While the coupon remains fixed, a bond’s market price fluctuates to reflect changes in market rates, among other variables. You can calculate a bond’s ...

    What Is a Credit Derivative?

    The complex world of investing grew a bit more challenging with the development of credit derivatives in the 1990s. A credit derivative is a financial contract in which one party transfers risk to another party. The credit derivative insures against default on a loan, for ...

    What Criteria Are Used to Invest in Stocks?

    The criteria for stocks that are likely to outperform over the long term include superior financial performance, strategic positioning, experienced management and reasonable price. The shares of well-managed companies with a consistent record of setting and meeting financial ...

    What Are the Dangers of Buying High-Dividend Stocks?

    Bonds are the usual investment for income investors but, when bond yields are low, they are forced to consider alternatives like high dividend-paying stocks. There are two main kinds of stock that pay dividends: preferred stock and dividend-paying common stock. The dividend ...

    What Are the Dangers of Investing in Technology?

    Investing in technology companies can be risky, because new technology standards and changes in the competitive environment can adversely affect business fundamentals and stock prices. Companies that once dominated their respective markets often find themselves on the defensive ...

    What Are Debt Focused Closed-End Funds?

    Closed-end funds are a type of managed investment security similar to mutual funds or exchange-traded funds. The majority of closed-end funds invest in debt securities and many of these funds offer investment exposure to debt investing strategies not found in other managed ...

    What Is a Debt Investment?

    When it comes to investing, you have two primary options: equities and debt instruments. Equities are things you own, such as stock or real estate. Debt instruments represent a loan from which you expect to receive a return of your principal with interest, such as a bank ...

    How to Decide Whether to Exercise a Call Option

    You can use options to both prevent portfolio losses and to speculate on market prices. Call and put option contracts give you the right to buy and sell the underlying shares at specified prices, known as strike prices, before predetermined expiration dates. You do not have to ...

    Decreases of the Dividend Payout Ratio

    Some companies pay regular or one-time dividends as a way of returning cash to their shareholders. Dividends are cash distributions from after-tax net income. The dividend payout ratio is the ratio of dividends per share to net income per share. For example, if a company's net ...

    Define Portfolio Risk

    Each investment carries a risk of loss. The higher the potential returns, the higher the risk. If you hold a portfolio with many investments, each of those investments carries its own risk. All of the investment risks combined result in an overall risk you have exposed your ...

    What Is a Derivative Contract?

    The widespread use of derivative financial contracts often receives at least partial blame for the 2008 financial crisis. An informed investor understands which types of securities are derivative contracts. In spite of the sometimes negative connotation attached to derivatives, ...

    Derivative Hedging Instruments

    Derivatives derive their properties from other securities, such as stocks, bonds and other derivatives. Options, futures and swaps are some of the common derivative instruments that trade on regulated exchanges or on over-the-counter markets. Investors, farmers, corporations and ...

    What Is a Derivative on Wall Street?

    For many, the concept of financial derivatives has come to symbolize Wall Street complexity. The phrase "little understood" appears often in news stories about them. But while individual derivatives can indeed be complicated, the idea behind them is simple. Derivatives ...

    How to Design a Portfolio of Dividend Stocks

    Investing in dividend stocks provides a steady stream of income that should grow over time. A portfolio of stocks should be as individual as the investor who selects the stocks. Some general guidelines allow you to develop a portfolio that functions in different market ...

    How to Determine the APR of Long-Term Investments

    Annual percentage rate primarily refers to interest rates on loans, but its calculation is nearly identical to an annual rate of return for investments. This similarity is attributed to both calculations' reliance upon the compound interest formula. For long-term investments, ...

    How to Determine Cost Basis for Stocks

    Selling shares of stock leaves you with cash in hand and a capital gain or loss. The amount of cash you end up with, called your net proceeds, equals the sale price minus broker’s commissions. You don’t pay taxes on all of your net proceeds. "Cost basis" is ...

    How to Determine the Cost of a Call & Put

    Call and put options are tradeable contracts with values based on the share price of an underlying stock. It seems like it should be easy to pick a stock and look up the current price of calls and puts for that stock. In reality, the task is a little more difficult -- starting ...

    How to Determine the Preferred Stock With the Annual Dividend and Rate of Return

    Preferred stock is an investment that provides ownership in a company, similar to common stock, and typically pays a fixed dividend, similar to a bond’s interest payment. If preferred stock has no maturity date, it is essentially a perpetuity, which is an investment that ...

    What Determines Bond Liquidity?

    Bonds are debt instruments, meaning when you buy a bond you are loaning money to the issuer in exchange for a promise from the issuer to return the face amount of the bond plus interest at a set time. Features to consider when you buy a bond include its maturity, interest rate, ...

    What Determines Whether the Price of a Mutual Fund Goes Up?

    Mutual funds offer investors the ability to put money into many different investments with a single purchase. Each mutual fund collects money from investors and uses it to buy assets that it hopes will grow in value. These assets may come from one sector of the economy or from ...

    Diamond Certification Vs. Appraisal

    Diamonds are worn on ring fingers to signify commitment, and the finest diamond specimens can cost a fortune. With so much riding on the reputation of this gemstone, it’s no wonder that every buyer wants to be certain he is getting what he pays for. Certifications and ...

    What Is the Difference Between a 529 & a Custodial Account?

    A 529 plan and a custodial account are personal finance tools that parents use to benefit their children. A 529 plan provides an investment vehicle designed for building funds to pay for college for children, while a custodial account acts as a trust that enables parents to ...

    Difference Between Annuity & Mutual Funds

    Annuities and mutual funds are investment products that can potentially provide you with long-term growth and supplemental income. Both product types involve certain fees and some exposure to the securities markets. Despite the broad similarities, there are many differences ...

    What Is the Difference Between Authorized Stock and Issued Stock?

    Companies that need to raise capital for business purposes may do so by selling shares of stock that make shareholders partial owners of the company. Shareholders can see a huge return on their investment if the company is successful. The company wishing to sell stock must first ...

    The Difference Between the Bidding & Asking Price of Stocks

    Though you hear about a company's "stock price" all the time, in reality every stock has two separate prices: the price you would pay to buy a share of that stock, and the price you would receive if you sold a share of that stock. The difference between the ...

    What Is the Difference Between Bonds & Equity in a Stock Portfolio?

    Stock portfolios, by definition, contain only equities. However, people use the term to refer to the broader category of diversified investment portfolios containing equities, bonds and cash. The asset mix — the proportion of stocks and bonds in a portfolio — depends ...

    Difference Between a Bond's Par Value & Its Market Value

    A bond is the financial equivalent of an IOU. If you're purchasing a newly issued bond from a government or corporation, the par or face value is the amount of money you invested, usually $1,000 per bond, which the issuer promises to return to you at par value after a certain ...

    What Is the Difference Between Buying a Call vs. Selling a Put?

    Call and put option contracts give holders the right to buy or sell the underlying shares at fixed strike prices on or before expiration. The writers, or sellers, of these contracts have the obligation to deliver -- for calls -- or buy back -- for puts -- the shares at their ...

    What Is the Difference Between a Cash Account and Margin?

    You must open a brokerage account when you are ready to start investing in stocks. One important question brokers will ask is whether you want to open a cash account or a margin account. There are important differences between these account types and how they work in stock ...

    Difference Between Cash Flow Statement and Statement of Shareholders' Equity

    Businesses and investors depend on financial statements to accurately depict the financial condition of an organization. Financial statements are vital to making investment decisions. Two important financial statements readily used by investors include the cash flow statement ...

    The Difference Between Consumer Staples and Consumer Discretionary ETFs

    One of the benefits offered by the large number of exchange-traded funds, or ETFs, is the ability to focus investments in specific sectors of the stock market. ETF shares trade on the stock market like shares of stock and allow investors to match stock index returns. ETF sponsor ...

    What Is the Difference Between a Dividend Rate & Dividend Yield?

    Stock dividends provide investors with an income stream just as interest earned from bonds or notes is investment income. However, the yield from a bond is consistent and pretty easy to understand. The current yield of a stock is the result of several variables, including the ...

    The Difference Between Dow Jones & NASDAQ

    Casual observers of the stock market will inevitably hear people mention "Dow Jones" and "Nasdaq." Strictly speaking, the first is a financial news and information company, and the second is a stock exchange. But in the day-to-day language of investors, ...

    What Is the Difference Between an E-mini and a Mini Forex Trading Account?

    For the novice trader, risking thousands of dollars on a single futures or Forex trade may be more than the trader can afford to risk. The "mini" type of trading accounts or contracts allow an individual trader to get in the game with a lot less money at risk. E-mini ...

    The Difference Between General Obligation Bonds & Revenue Bonds

    States, counties and cities that seek financing for public projects may issue municipal bonds. By issuing these debt securities, the government is borrowing money from the public. The bondholders will be repaid the principal plus interest over a specific span of years. The two ...

    What Is the Difference Between an Incentive Compared to a Non-Qualified Stock Option?

    To induce employees to stay and put forth their best efforts, a lot of companies award employee stock options which come in two varieties. You might receive either incentive or non-qualified stock options. Either way, if the company stock goes up, you stand to make a substantial ...

    Difference Between Liquid Capital vs. Investment Capital

    Public and private investment markets give you the opportunity to invest in businesses, securities, bonds and liquid assets. Individuals interested in starting a company need capital from investors to fund business establishment and growth. You may become a silent partner in a ...

    The Difference Between a Micro Cap, Small Cap and Penny Stock

    The terms microcap stock, small cap stock and penny stock are sometimes used interchangeably but key distinctions exist. Microcap and small cap stock deal with the total capitalization of a company, while the term penny stock deals with the price of a stock. Although no hard ...

    The Difference Between Perpetuity & Ordinary Annuities

    The term “annuities” usually refers to retirement plans that pay a fixed or variable income with a guaranteed minimum to the account holders. But in general, annuities are any payments of equal amounts you make or receive at regular intervals. A perpetuity and an ...

    What Is the Difference Between a Portfolio & a Watch List?

    Monitoring your current or prospective investments allows you to track price movements and note important fluctuations. This knowledge may be just the decision-making tool required to withdraw from or increase your position. Portfolios and watch lists offer this monitoring ...

    What Is the Difference Between a Realized & Unrealized Loss?

    There are no guarantees in the stock market, and your account balance fluctuates as the securities in your portfolio react to market conditions. The value of your account will rise and fall as long as it contains variable investments, and in this situation you should understand ...

    The Difference Between a Return on Equity and Earnings Per Share

    Return on equity and earnings per share are profitability ratios. ROE measures the return shareholders are getting on their investments. EPS measures the net earnings attributable to each share of common stock. Companies usually provide EPS and other ratios in their quarterly ...

    Difference Between Speculating and Investment

    Investing involves buying and holding financial assets over the long term. Speculation is about attempting to realize short-term profits by exploiting market inefficiencies. Investors tend to hold on to their investments through market downturns and rallies as long as the ...

    What Is the Difference Between a Statement of a Stockholders' Equity and a Balance Sheet?

    Every publicly held company must compile and publish four basic financial statements -- the balance sheet, income statement, cash flow statement and statement of stockholders' equity. These documents are interlinked, with each statement complementing or fleshing out information ...

    What Is the Difference Between Stockholders & Option Holders?

    Shareholders are the owners of companies, while option holders are merely the owners of contracts to buy or sell shares in companies. Shares can be traded in any publicly held company, but stock options are derivatives that trade only on the shares of a selected few companies. ...

    The Difference Between Stocks & Bonds & Mutual Funds

    Since diversification is always recommended in investing, the beginning investor will want to learn the basic differences between the products available. For example, three popular investments are stocks, bonds and mutual funds. Knowing how these investments differ can help the ...

    What Is the Difference Between a Treasury Bond & a Savings Bond?

    The Bureau of Public Debt, a department of the United States Treasury, issues debt securities such as notes, bills and bonds to raise capital for the federal government. In addition, a division of the bureau issues and services U.S. savings bonds. Both Treasury bonds and U.S. ...

    Differences in an Annualized Return & an Absolute Return

    The sole purpose of an investment is to make money, but too many people approach investments haphazardly without a sound understanding of how their investments perform. Without such knowledge, an investor could be committed to a losing or inferior investment and never even know ...

    Differences Between Cumulative & Non-Cumulative Preference Shares

    "Preference share" is just another name for preferred stock. It is neither a common stock nor a bond, but a hybrid of both. Like common stock, it brings capital into the company that issues it, instead of more debt. Like a bond, it pays a fixed income that is normally ...

    What Are the Differences Between a Mortgage Bond and a Debenture Bond?

    The main difference between mortgage bonds and debenture bonds is collateral. The mortgage bond is collateralized by something that has value and can be sold to pay the bondholders if the company defaults on payment of that bond or goes through bankruptcy. Debentures have no ...

    The Disadvantages of Dividend Reinvestment

    Investing in stock can provide you not only with profits over time but also an ongoing source of income. Income from stock comes in the form of dividends, which some companies pay their investors. One option for investors is to reinvest their dividends to buy more stock. ...

    Disadvantages of a Money Market Account

    An individual money market account is insured up to $250,000 if you choose a bank or credit union covered by the National Credit Union Administration or the Federal Deposit Insurance Corporation. Don't confuse this type of account with a money market mutual fund, which isn't ...

    The Disadvantages of Preferred Shares

    At first glance, preferred stocks seem like a great deal. They usually pay relatively high fixed dividends and, if the company fails, owners of preferred shares get their money back before common stockholders. If this seems too good to be true, your instincts are on track. These ...

    What Is a Diversified Portfolio?

    Diversified portfolios include investments spread across different asset categories, such as fixed-income, equities, commodities and derivatives. Further diversification is possible within each asset category, such as growth and utility stocks within equities or bonds and ...

    How to Do a Dividend Capture

    Buying a stock and expecting its price to rise can be a frustrating method of investing. To profit from the market this way, you have to do some background research, attempt to time your buys and sells, and hope that no negative news appears to wipe out any gains before you ...

    How to Find the Dividend Payment With Common Stock

    Stock dividends can account for a significant portion of the total return from your stock investments. Keeping track of the dividends from individual stocks can be difficult because each company sets its own dividend-payment policy and schedule. Develop a system of ...

    How Do Dividends Affect Stock Price?

    Your total return from dividend stocks consists of the rise in your stock prices plus the corporate profits companies pay out as dividends on your shares of their stocks. You profit when stock prices rise and dividends remain steady. Knowing the relationship between dividends ...

    Are Dividends Paid per Shares Owned?

    One important feature of owning some stock is the opportunity to receive a cash dividend. Stock dividends are payments from the company to each of its investors. Dividends are paid per share owned, which means buying additional shares entitles you to a larger dividend payment. ...

    Dividends Vs. Long-Term Capital Gains

    There are two basic ways to earn a profit from owning shares in a company. If the company pays a dividend, you receive regular income, usually on an annual or quarterly basis. If the market value of the investment rises, you can sell the shares for a capital gain. The length of ...

    Dividends vs. Real Estate Investment

    Investing money can give you an opportunity to see your savings grow or to secure a new source of income. Investing for income can take many forms, including dividend stocks and real estate. In both cases, the owner receives money on a regular basis while hoping for the ...

    Dollar Cost Averaging vs. Market Timing

    Dollar cost averaging is the periodic investment of funds, while market timing refers to investment decisions based on market conditions. These strategies determine how and when investors allocate their surplus cash into stocks, bonds, mutual funds and other financial assets. ...

    What Is Double Blind Investment?

    In the investment world, knowledge is good. Anyone trading in the stock market or risking money on investments should know what they're getting into, financially speaking, and who's managing their money. The conventional wisdom that demands research before risk doesn't hold true ...

    What Is the Dow Jones Sustainability Index?

    Market indexes, such as the S&P 500 index, track the performance of companies across different sectors of the economy. Launched in 1999, the Dow Jones Sustainability Indexes track the performance of global companies on economic, environmental and social criteria. Investors ...

    What Is the Duration of a Bond With Two Years to Maturity?

    Bond duration is a measurement of the risk of a bond in relation to changes in interest rates. The calculation of a bond's duration is complex -- but that is what calculators are for. Using the duration to make investment decisions is a simpler task and more useful for investors.

    How to Get Educated on Stocks

    The stock market can often be overwhelming to newcomers. To avoid making investment mistakes, allow plenty of time to familiarize yourself with the various options available. Although research is a must, hands-on experience and a few dependable contacts are also a great way to ...

    EE Savings Bonds Information

    The U.S. Treasury first issued EE savings bonds in 1980 as a replacement for wartime E bonds dating from 1941. The Treasury suggests buying EE bonds as savings for long-term goals or as gifts for special occasions. Older EE bonds appeared in paper form, but on Jan. 1, 2012, ...

    The Effect of Bond Rating Changes on Common Stock Prices

    Information is the lifeblood of equity trading, and a rating change for a company's bonds can be an important factor in determining whether investors want to buy or sell that company's stock. A change in that rating may move stock prices. That's why it's important to understand ...

    What Is the Effect of a Declared and Issued Stock Dividend ?

    Dividends to shareholders are usually in the form of quarterly cash distributions from after-tax earnings. However, some companies may choose to pay dividends in stock, while others give investors the option of receiving their dividends in cash or stock. These stock dividends ...

    The Effect on Treasury Bonds When the Interest Rate Is Raised

    U.S. Treasury securities including Treasury bonds are viewed as one of the safest investment options. The major risk involved with Treasury bonds is interest rate risk -- the change in bond values when interest rates change. As marketable securities with fixed rates of interest ...

    Eight Types of Saving and Investment Options

    Saving and investing money is an essential part of planning for the future. Whether it's your own retirement or a child's college education, setting money aside and trying to make it grow in value is often the only way to pay for expenses that exceed your income. Thankfully, you ...

    Elements for a Margin Account

    Most individual investors trade stocks and other securities through a cash account with their investments broker, but it is possible to increase your purchasing power by opening a margin account. One element of a margin account is the ability to borrow money from your ...

    How to Endorse Savings Bonds as the Personal Representative of Estates

    When the owner of a savings bond dies, the U.S. Treasury has procedures for redeeming the bonds. As an estate executor, you have the authority to endorse savings bonds because you are the personal and legal representative of the estate. Visit a bank and follow specific ...

    What Does Equity in Assets Mean?

    In an investment context, equity refers to your ownership interest in an asset. Most people associate the term with home ownership and real estate. Equity is the amount you get to keep after you pay off all the loans associated with a piece of property, and pay off anyone else ...

    How to Estimate the Value of a Bearer Bond

    Most bonds are issued to a particular individual in that person’s name; bearer bonds belong to whoever holds them. In this respect, they’re similar to cash. If you inherit bearer bonds from someone or find some tucked away in the attic, you might not know the value ...

    Do ETFs Pay Dividends in Cash or New Shares?

    Exchange traded funds often specialize in the type of stocks they own, and one of these specialties is dividend stocks. When an ETF owns stocks that pay dividends, it passes them on to shareholders. If you own such an ETF, you will receive cash as it pays dividends. However, you ...

    How to Evaluate Energy Stocks

    Investors see their profits rise and fall based on the performance and value of the companies they own shares in. Some investors choose to focus on a single sector of the economy, such as energy or agriculture, while others diversify and use energy stocks to balance out a larger ...

    Exit Options for Private Equity Investors

    Private equity investors are willing to take on more risk than banks and other traditional sources of capital and are often the only source of funds for start-ups and companies that require restructuring. These investors include wealthy individuals, institutional funds and ...

    How Does the Expected Return Affect a Stock Price?

    Expected return is simply an estimate of how an investment will perform in the future. Investment analysts formulate expected returns by examining the historical performance of the stock during different economic cycles, and arrive at an expectation based on the stock's return ...

    Expected Return of a Call Option

    Buying call options is a low-cost way to participate in an upward movement of a stock price. The way a call option works results in an expected return that is open-ended in one direction and closed in the other. How much you can expect to make from a call option depends on where ...

    What Is an Expired Option?

    An option is a financial contract that gives the holder the right, but not the obligation, to purchase or sell the underlying security at a set price for a specific period of time. Unlike owning stock in a particular company, owning an option does not convey any ownership ...

    Explain the Difference Between a Stock & a Dividend

    Stocks and dividends are critical terms for securities investors to know, especially those with interests in the stock market. A stock is investor ownership in a company. Investors purchase this ownership stake in shares. The shares change in value as their trading prices change ...

    Explanation of EPS in Stocks

    Earnings per share, commonly referred to in the investment community as EPS, is one of the benchmark factors that stock analysts use to determine a company's financial health. According to the NASDAQ, changes in an company's EPS and revenue are primary factors in influencing ...

    What Is an F Series Bond?

    In order to finance government operating expenses, the U.S. Treasury Department began selling savings bonds in 1935. The bonds provide the purchaser with a guaranteed return at the date of the bond's maturity. The return is typically paid at face value, as was the case with the ...

    Factors That Affect the Stock Market

    While the performance of an individual company varies in the stock market due to news about its performance, such as earnings reports and acquisition announcements, there are outside influences that will affect stocks and the market as a whole. These factors include, but aren't ...

    Factors Affecting Bond Yields

    Bonds are interest-paying securities sold by corporations and governments as a way to borrow money. Investors often buy bonds to produce income and diversify their portfolios. Yield is the actual rate of interest you get when you buy a bond. For bond investors, yields and the ...

    What Factors Determine the Price of Stocks?

    The main factor driving stock prices is investor demand. Stock prices rise when buy orders outnumber sell orders, and prices decline when sell orders outnumber buy orders. Demand is proportional to four factors: earnings, economy, expectations and emotion. Stock prices usually ...

    What Factors Determine the Relative Attractiveness of Assets Denominated in Dollars?

    Dollar-denominated assets include stocks, bonds, real estate and other assets with market prices quoted in U.S. dollars. The interconnected global markets and the near instantaneous movement of funds across continents have meant that investors can reallocate their investments in ...

    What Factors Influence the Rates of Return on an Investment?

    The rate of return on an investment asset is the income and capital appreciation over a measurement period divided by the cost of acquisition, expressed as a percentage. Assets include stocks, bonds, real estate and mutual funds. The rates of return depend on several factors, ...

    How to Figure the Average Cost Basis After a Reverse Stock Split

    Reverse stock splits occur when the company reduces the number of outstanding shares by converting a specified number of old shares into one new share. For example, a company might exchange three old shares for one new share. As a result, the price per share will go up. A ...

    How to Figure Intrinsic Value of Put Option

    When you buy a put option, you purchase a contract granting you the right to sell shares of a stock at a guaranteed price referred to as the strike price. You can use, or exercise, a "put" at any time until it expires. The fee you pay for the contract is called a ...

    How to Figure Out How Much a Dividend Yield Will Get You

    Dividends increase your investment returns and provide an income stream that you can reinvest or spend freely. When you consider a stock for investment, you can use its dividend yield to figure the amount of its dividend payments. A dividend yield represents the annual cash ...

    Finding the Covariance of an Investment

    When you analyze investments in your portfolio, it helps to look at how they relate to one another. Covariance is a statistical figure that measures how two investments move together. A covariance can be positive, negative or zero. A positive covariance means two investments ...

    What Are Five Economic Factors That Affect Equity Returns?

    Economic factors affect corporate profits, which influence stock prices and equity returns. Revenues depend on consumer and business spending, which vary with interest rates, employment and global economic conditions. Operating and non-operating expenses depend on interest ...

    Five Stages of Investing

    Many people begin investing with a "fire, aim, ready" approach and, if luck smiles on them, they acquire wealth. They may not realize the successful acquisition of wealth is a benchmark-driven process over time. It involves getting ready for investing by accumulating ...

    Fixed Deferred Annuity vs. Savings Account

    Deferred annuities and savings accounts are generally regarded as low risk investment options. Both account types provide you with regularly recurring interest payments, and neither of these investments expose you to fluctuations of principal. Despite the broad similarities, ...

    Do Foreign Stock ETFs Take Advantage of the Falling Dollar?

    For owners of foreign stock investments, a decline in the value of the dollar against other currencies is a positive factor for their investments. If you think the U.S. dollar will weaken, holding foreign stock exchange-traded funds in your investment account may provide ...

    How to Form a Stock Portfolio

    Stocks are usually a core component of investment portfolios because they offer capital appreciation and dividend income. The design of your stock portfolio is important because its performance could affect your financial plans. The design will depend on your financial ...

    Four Types of Risks Posed in Investing

    Most investments face risks, such as deteriorating business fundamentals, economic downturns and market volatility. The potential rewards are higher for riskier assets. For example, unlike Treasury bonds, which are fully backed by the U.S. government, corporate bonds carry risk, ...

    How Fractional Shares Work

    It’s not uncommon for an investor to see a partial or fractional share listed on account statements from mutual funds, brokers or companies they’ve invested in. When a transaction results in a fractional share, it may be added to the investor’s share holdings. ...

    What Is a Gann Retracement?

    An early developer of technical analysis and trading was W.D. Gann. He postulated that in a perfect market, a stock price would move at a 45-degree angle either up or down on the stock chart. The 45-degree line indicated the price of the stock is moving at a rate that balances ...

    How to Give a Grandchild a Savings Bond

    Buying your grandchild a U.S. saving bond is considered a safe investment because it is guaranteed by the government of the United States. Savings bonds also are advantageous because you don't have to pay local and state taxes on any interest earned. Before Jan. 1, 2012, it was ...

    Gold & Silver Investment Strategy

    With uncertainty persisting in global markets it behooves investors to observe the old European maxim that “… one should always have just enough gold to bribe the border guards …” Gold and silver offer investors tangible assets with the opportunity for ...

    What Is a Growth and Income Mutual Fund?

    Investors choose where to put their money based on their priorities. Some want growth, meaning the value of the investment itself rises over time. Some want income, meaning a steady cash flow generated by the investment. And of course, many want both. A growth and income mutual ...

    What Happens in an ETF Liquidation?

    Exchange-traded funds are classified as open-end companies or unit investment trusts, according to the U.S. Securities and Exchange Commission. Similar to mutual funds in some respects, shares of ETFs trade on the exchanges like shares of stock. Some of the least successful ETFs ...

    What Happens to Partial Shares From Reinvested Dividends When You Sell?

    When you receive a statement of your investment in a stock, you might see a fractional share listed as well as whole shares. This is very common if you participate in a dividend reinvestment plan, or DRIP, offered by a company. Don’t dismiss those fractional shares. If a ...

    What Happens if You Sell a Dividend Paying Stock After Receiving a Dividend?

    You must choose your selling date carefully if you own a stock that pays a dividend. The dividend you receive will affect the selling price, and you can be disappointed in your overall return if you sell at the wrong time. Learn the important dates in the life of a stock that ...

    What Happens to Shares in a Bull Call Spread?

    Buying and selling call options are two common transactions for options traders. A bull call spread is a trading strategy that combines both. As a call option buyer, you purchase the right to purchase shares of stock at a predetermined strike price until the option expires. When ...

    What Happens When the Stock Price Is Lower Than the Stock Option Price?

    The limited term nature and set exercise price of stock options adds to the complexity of evaluating and profiting from an options purchase. If you are holding a stock call option and the current stock price is below the option exercise price, you should carefully evaluate your ...

    What Happens When a Stock Split Is Issued to Stockholders?

    Companies often split their stock to decrease the price per share to make the stock more attractive to investors. If you own stock that splits, understanding how the price of the shares changes, as well as the tax implications, helps you make better decisions in the aftermath of ...

    What Happens to Stocks When Companies Merge?

    Mergers are combinations involving at least two companies. The result of a merger could be the dissolution of one of the legacy companies and the formation of a brand new entity. The boards of the companies involved must approve any merger transaction. State laws may also ...

    What Happens to the Value of the Issued Stock When Common Stock Is Redeemed & Canceled?

    Companies issuing stock may from time to time redeem shares by buying them back from stockholders in the open market. When a stock buyback occurs, it has repercussions for the company’s existing shareholders because it quickly affects the price of their shares. Stock ...

    Hazards of Investing in Gold & Silver

    You don’t often hear the word "hazard" associated with investing in precious metals, but you should know that dabbling in gold and silver can be risky. True, gold and silver are both great hedges against inflation -- particularly if you own bars, jewelry and ...

    Hedge Fund Pros and Cons

    A hedge fund is an investment vehicle that allows investors to pool their money with a fund manager who oversees the investment of that money. Hedge funds are not as readily available as other investment tools, such as mutual funds, and they offer participation to investors in ...

    Do Hedge Funds Borrow a Lot of Money to Make Investments?

    Hedge funds generally invest in assets and asset classes that are not highly correlated with the U.S. stock market or bond markets. As such, they are useful for "hedging" more conventional investments. While the Investment Company Act of 1940 restricts what ...

    How Do Hedge Funds Work?

    Hedge funds pool money to invest in a diverse range of securities. Unlike mutual fund managers, hedge fund managers usually do not have any restrictions on investment strategies or types of securities. To maximize returns, hedge fund managers can borrow money, sell securities ...

    How to Hedge Long Equity Positions

    A long equity position means that you have purchased the share, while a short position means that you have borrowed shares from your broker and have sold them hoping to buy them back later at a lower price. Hedging involves protecting investments from price declines. For ...

    What Is a Hedge in the Stock Market?

    You have probably heard the term "hedge your bets," which, under one definition, means to make smaller bets on different outcomes in case your large bet does not work out. Hedging in the stock market works the same way. You set up strategies or buy securities in case ...

    What Is HH Bond vs. EE Bond?

    HH and EE savings bonds are both conservative investments, fully backed by the U.S. Government. The Treasury has offered various types and denominations of bonds over time, transitioning from paper to electronic bonds in recent years. You can no longer buy the older HH bonds, ...

    Do You Have to Hold a Stock to a Dividend Payable Date?

    Each individual corporation sets the dates on when a dividend payment becomes effective and when the money will be deposited to your account -- the payable date. However, all companies use the same date descriptions when a dividend is declared. The important consideration is to ...

    Holding Currency as Long-Term Investment

    Investors can use a number of unconventional investments to balance their portfolios. Aside from common investments, such as stock, bonds and retirement plans, foreign currency represents a place to grow wealth. For investors who choose to put money into currency for extended ...

    What Impacts a Stock Price?

    Investing in stock is among the most risky, and potentially profitable, things to do with your money. Stock prices are reflected in daily quotes as well as the ever-changing prices throughout the trading day. While stock is safest as a long-term investment, it's useful to ...

    Importance of a Prospectus

    A prospectus is a document that companies and others file with the Securities and Exchange Commission when they are offering new shares of a security to the public. One of the most common reasons for issuing a prospectus is when a company is making an initial public offering, ...

    Importance of Shares

    Companies often issue shares to raise capital for operational and strategic reasons. Shares of public companies trade on regulated stock exchanges, where investors can place buy and sell orders. Shares are an integral part of the economy because they are a core component of most ...

    Importance of Volatility in Stocks

    Volatility has several different applications for trading, investing and predicting the direction of the stock market. If you can predict the direction of the market, you have a good idea what to expect of the economy, so volatility has applications beyond the stock market. ...

    What an Increase in Interest Rates Causes to Investments

    The U.S. Federal Reserve adjusts the federal funds rate, which is the main short-term interest rate, to control inflation and spur economic growth. Changes to short-term rates affect long-term interest rates and various economic indicators, including the stock and bond markets. ...

    What Is an Index Divisor?

    An index divisor is a mathematical factor that allows stock market indexes to accurately show changes in the value of the stock market over time. The divisor of an index does not directly affect investors except that the divisor keeps all of the investment products -- such as ...

    Index Trackers vs. Picking Shares

    Index trackers, or funds, invest in shares that track a particular stock market index, such as the S&P 500. Picking stocks involves researching company fundamentals and buying those that meet certain investment criteria. Index tracking is a passive investing strategy because ...

    Why Is Inflation Bad for Bonds?

    While including bonds in your portfolio generally entails much less risk than purchasing stocks, there are still risks that investors need to contemplate when considering an investment in bonds. Inflation risk is nearly universal across all bonds and bond categories such as ...

    What Influences the Stock Market?

    Stock markets play an important role in the financial plans of millions of Americans and other investors worldwide who are increasingly taking control of their investment decisions. Markets react to the actions of individual investors, institutional money managers and financial ...

    Are Inherited Stocks Long-Term or Short-Term Capital Gains?

    Gains or losses on stock investments are normally long-term if you own the shares for more than one year. If you owned the stock for one year or less, gains and losses are short-term. Inherited stock might seem to pose a problem because the deceased owner made the investment on ...

    What Is an Initial Public Offering (IPO)?

    An initial public offering, or IPO, is the first sale of a company’s stock to the public. It is considered a milestone event for entrepreneurial companies, signaling to the world that the company has made it as a business. “Going public” with an IPO provides ...

    How to Introduce Your Children to the Stock Market

    For long-term financial stability, children need to learn how to invest their money so that as adults they have a cushion against inflation and a source of funds that is independent from any job. While the stock market has plenty of ups and downs, writes "USA Today" ...

    Introduction to a Portfolio

    The strength of an investor's portfolio may determine when she can retire, how much income she has and what decisions about investing she should make in the future. But assembling and managing a successful portfolio is no easy task. Before you can understand your portfolio, you ...

    How to Invest Money Belonging to a Teenager

    A mom wrote to Get Rich Slowly.org about turning her financial decisions over to her 11-year-old son. He picked her individual retirement account investments, paid bills and oversaw a mortgage refinance that turned him into a local media star. If you have an equally compelling ...

    How to Invest in Wheat, Soybeans and Corn

    Investing in the major grain categories of wheat, soybeans and corn provides exposure to an alternate asset class with different performance potential than the standard stock and bond investment categories. Investing in grains is a play on long-term population growth and the ...

    What Is Investing in Debt?

    Investment products usually fall into one of two categories: equity securities or debt instruments. You can think of these categories as "ownership" vs. "loanership." When you buy an equity security, such as stock or real estate, you have an ownership ...

    What Is Investment Froth?

    A froth or bubble occurs when the underlying fundamentals do not support existing asset prices. Investment assets include securities, such as stocks, bonds and real estate, including houses and condominiums. Bubbles do not end well because eventually the fundamentals catch up ...

    Investment Strategies and Exchange Traded Funds

    Exchange-traded funds track market and industry indexes. They trade on exchanges just like stocks and play a role in many investment strategies. Passive investors can buy index ETFs to mirror the performance of major market indexes, while active investors can use ETFs along with ...

    What Does ISO Stand for in Restricted Stock?

    The acronym "ISO" stands for "incentive stock options." These are options an employer grants to employees to buy shares of the company's stock at some point in the future, paying the current price or in some cases even less. They can apply to publicly or ...

    What Does Issuing Bonds Mean?

    When you make an investment in a company, you help to finance the growth of that company. This happens in two different ways: You can buy partial ownership in the company by buying stock, or you can give the company a loan by buying a bond. A bond issue is the process by which a ...

    Key Differences Between Stock Investments & Bond Investments

    The most basic difference between stocks and bonds is when you own a share of stock, you own equity or a fractional percentage of the company. Stock prices fluctuate according to the value of the company. When you own a bond, you own debt. You are lending the company money that ...

    What Are the Key Performance Indicators for Researching Stocks?

    Researching a stock takes time, but it is time well spent. A few hours researching a company's operating history and industry environment could avoid significant future losses. Profitability, liquidity and valuation are some of the key indicators for researching stocks. ...

    Key Things to Look at in an Annual Report When It Comes to Investing

    A company's annual report provides insight into its internal strengths and weaknesses and external threats and opportunities. The key things to review in annual reports relate to products, performance and people. The overview sections describe key products and services, while ...

    What Kind of Mutual Fund Can You Add Money to Every Week?

    If you are looking for a place to invest that offers professional management of your money and gives you an instantly diversified portfolio, you might consider a high-quality mutual fund. While most funds require a sizable minimum initial investment, they allow you to add ...

    What Kind of Stocks Are Included in Nasdaq?

    Nasdaq started out as the National Association of Securities Dealers Automated Quotation system in 1971. Since then, it has grown to become the world's largest electronic stock market, and its former acronym has become its proper name. The listed companies are of different sizes ...

    Large Cap Vs. Mid Cap

    The term "mid cap" refers to established, generally publicly traded companies that are too small to be considered "large cap" but are larger than what we normally consider small-cap. The term "cap" refers to "market capitalization." The ...

    How Does Light Volume Affect the Stock Market?

    Traders always watch volume of specific stocks and of the market as a whole. Technical analysts are particularly concerned with volume because it is a gauge of market sentiment. They study the volume of advancing issues against that of declining issues. When investors are ...

    What Is Most Likely to Push the Price of a Company's Stock Higher?

    On the surface, investing in stocks appears to be a lot like gambling. When you buy a stock you are betting the price will go up. The problem is, you are probably buying the stock from someone who is equally convinced the stock's price is about to go down. Investing in stocks is ...

    How to Liquidate an Annuity

    An annuity is an investment vehicle that allows you to save money for retirement while deferring taxes on earnings. You can choose when you want your annuity to start disbursing payments, such as at your retirement age. However, if you need the funds immediately, it is possible ...

    How Long Will It Take My EE Savings Bonds to Mature?

    The U.S. Treasury recommends EE bonds as a safe and patriotic investment with the full backing of the U.S. government. Paper EE bonds used to be available through savings institutions, but now the Treasury sells electronic EE bonds online at TreasuryDirect. The electronic bonds ...

    How Long Do Mature Savings Bonds Accrue Interest?

    U.S. Series EE Savings Bonds are interest-bearing securities backed by the full faith and credit of the United States. Savings bond interest is paid at a fixed rate over the life of the bond and is taxable. Savings bonds are sold in increments of $25. Like all U.S. government ...

    How Do Long Municipals Perform in a Steepening Yield Curve?

    The main thing to remember about bonds is that bond prices and interest rates move in the opposite direction from each other. So as yields rise, bond prices fall. It's a mathematical equation. The longer the bond's duration, the more severe the effect a change in yield will be ...

    How Long Do You Need to Own Stock to Get a Dividend Payout?

    The idea of buying shares of stock, holding them long enough to collect a dividend and then selling the shares might seem like a way to make quick and easy profit. Since you are not holding the shares long-term, the process can be repeated with different stocks, allowing you to ...

    What Does Long & Short in the Stock Market Mean?

    Long positions refer to the purchase of securities, such as stocks, bonds and derivative contracts. Short positions occur when investors sell shares, which they borrow from brokers, hoping to buy these shares back at lower prices. Current and anticipated market conditions ...

    Long Term Financial Effects of Solar Panels

    Solar panels don't just benefit the environment. They may also have long-term financial effects when they are installed properly, both for individuals and for the economy at large. To a great extent, solar panel efficiency depends on where you live and how much sun your property ...

    How Long Till a Savings Bond Matures at Face Value?

    Although the U.S. Treasury has mostly phased out the issuance of paper savings bonds, many investors are familiar with paper bonds that are purchased for one-half of the face value. One common point of confusion is when that $50 or $100 savings bond will actually be worth $50 or ...

    Long-Duration Bond Strategies

    Investing in bonds provides you with a guaranteed return when the bond matures. Buying long-duration bonds can be a hedge against falling interest rates, or a way to invest for a long-term goal, such as college tuition or retirement. Depending on your goals, you can adopt one of ...

    Long-Term Vs. Short-Term Investment

    Many investors claim you should buy and hold investments, ignoring short-term market dips. However, some stocks decline to zero, and buy-and-hold investors regret skipping selling opportunities that would have preserved cash. Short-term investors hold investments for one to ...

    How to Look Up a Mutual Fund CUSIP

    A Committee on Uniform Securities Identification Procedures – or CUSIP – number is used primarily by industry professionals to identify clearances and settlements for a particular investment. Each CUSIP is a unique nine-digit number belonging to a particular ...

    How to Look Up Mutual Fund Ticker Symbols

    A ticker symbol is a single letter or group of letters that designate a particular security, such as a stock or mutual fund. Mutual fund ticker symbols typically have five letters and end in “X.” Because mutual fund providers sometimes offer multiple funds with ...

    How to Get Lost Savings Bonds Reissued

    Savings bonds provide a guaranteed return on investment if you hold them until their maturity date. You purchase the bond for a discounted price and can cash in the bond later for the price you paid plus interest. Series EE and I bonds can earn interest for 30 years. Because you ...

    How to Make Money in Stocks Without Being Paid Dividends

    Some companies pay dividends to their shareholders from after-tax earnings. Investors benefit from the regular dividend income and could also benefit from share price appreciation. However, most companies do not pay dividends. Some buy back stock with their surplus cash, while ...

    Making Sure There Is Cash Flow for Dividend Investing

    When you invest in stock for dividends, you want to make sure a company generates enough cash flow to make its dividend payments. You can measure this by comparing a company’s free cash flow-to-equity (FCFE) to its dividend payments. FCFE is the money a company generates ...

    How Many US Savings Bond Can I Buy?

    United States savings bonds are a time-honored way to invest money safely. As of January 1, 2012, series EE and series I savings bonds are available only in electronic “book entry” form through Treasury Direct. Paper savings bonds are no longer sold. There are ...

    What Is Margin Debt?

    Margin debt is money that you borrow from your broker to trade securities in designated margin accounts. For example, if you buy 100 shares at $20 each, you would normally put up $1,000 in cash and the broker would lend you the remaining $1,000 needed to complete the trade. This ...

    What Is Margin Equity?

    A margin trade requires borrowing money from your broker. Borrowing money to trade stocks or other securities has a lot of appeal for investors because of leverage, which simply means you put up less money to make a trade than a cash purchase requires. Your broker wants ...

    Market Capitalization vs. Total Assets

    Total assets and market capitalization both help you evaluate a company, but they tell you different things about it. One is a measure of company size and reach -- how much "stuff" the company has. The other is a measure of value, as determined by the market -- that ...

    What Does It Mean if a Company Is Publicly Traded on the New York Stock Exchange?

    Being listed on the largest U.S. stock trading forum, the New York Stock Exchange (NYSE), carries a high level of prestige, but getting there isn't easy. To be listed on the NYSE, a company must have substantial holdings and must give up a significant amount of internal control.

    What Does It Mean if a Stock Doesn't Pay Dividends?

    Before you can invest wisely in the stock market, you need to know the difference between various types of stock. One way to classify stocks is by whether or not they offer dividends. A dividend is an annual or quarterly cash payment from the company to each of its investors. ...

    What Is the Meaning of EPS in Investments?

    "Earnings per share" is the net income attributable to common shareholders -- net income minus preferred dividends -- divided by the number of outstanding common shares. Net income is equal to sales minus operating expenses, such as administration and marketing, and ...

    How Much Return on My Investment Do I Get on a CD?

    Bank certificates of deposit provide a combination of a safety of principal and the ability to earn yields greater than the rates paid on savings or money market accounts. Banks advertise rates and yields for different CD options. You can use that information to calculate your ...

    How to Know How Much a Stock Share Pays

    An investment in shares of stock does not come with a guarantee concerning the future returns. The trade-off for an unknown future is the potential to make significantly higher gains than what can be earned from investments that pay a fixed return. Stock shares reward investors ...

    How Much Taxes Do You Pay on Sold Stock?

    For tax purposes, you have a capital gain or loss only when you sell shares. How much you pay in taxes on sold shares will vary depending on how long you owned the shares as well as on the size of your capital gain. If you lost money on the stock investment, you may use the loss ...

    Multiple Classes of Common Stock

    Companies issue stock to raise funds for strategic and operational reasons. Shares of public companies trade on regulated exchanges. Companies typically have one class of common shares, but exchanges allow companies to issue multiple classes. The letters "A" and ...

    How Mutual Fund Prices Fluctuate With the Market

    Mutual funds are companies that create investment pools made up of thousands of different securities such as stocks and bonds. Both institutional and private investors can buy shares in mutual funds. Market volatility affects mutual fund shares in the same way that it impacts ...

    Mutual Fund Yield Versus Return

    When you buy a fixed income investment such as a bank certificate of deposit or a Treasury note to be held to maturity, the yield paid by the investment and your annual return are essentially the same percentage. With a mutual fund investment, you get to include the additional ...

    Negatives of Stock Options

    Call and put option contracts give option holders the right to buy and sell the underlying shares at specified prices, known as strike prices, before they expire. You can use options to hedge against portfolio losses and to speculate on price movements. Options give you ...

    What Are the Numbers Next to the Stock Price?

    Stock tables tell you more than just the current price of a given stock. They also provide context for that price, such as how much the price has gone up or down, where the current price fits into the stock's recent history and how much demand there is for the stock. Different ...

    What Occurs With a Stock Split?

    A stock split is viewed as good news for owners of the shares of a particular company, although the split will not immediately make the investment worth a lot more money. Stock splits are used by companies to keep the share price in a certain value range and desirable in the ...

    About Online Investment Brokers

    Online investment brokers have leveraged information technology to make trading fast and affordable for individual investors. With a high-speed Internet connection, investors can trade stocks on major U.S. exchanges from the comfort of their homes or even while traveling. Online ...

    What Is an OTC Derivative?

    An over-the-counter derivative is a financial contract with terms privately negotiated between two parties, unlike a derivative with standardized terms that is traded on an exchange. Derivatives reduce one party's risk to exposure by transferring the risk to another party ...

    How to Find Out If Bonds Have Been Cashed

    About $16 billion in unredeemed U.S. Savings Bonds are still floating around, waiting to be cashed, according to the U.S. Treasury. If you have found some old certificates, depending on the issue date, it may be a simple thing to find out if savings bonds have been cashed out ...

    How to Find Out if a Firm Pays a Cash Dividend

    A cash dividend is a distribution of a portion of a company’s earnings to shareholders. Dividends are a key benefit to owning stock. They enhance your returns and allow you to participate in a company’s success without selling your shares. Not all companies pay a ...

    How to Find Out What Percentage of Your Portfolio Each Stock Makes Up?

    Your investment portfolio’s overall return depends on the performance of each individual investment in the portfolio. A stock that makes up a greater percentage of your portfolio influences your overall returns more than a stock that makes up a lower percentage. These ...

    Outstanding Stock Vs. Authorized Stock

    Companies issue stock to raise funds from investors. Authorized stock is the maximum number of shares a company can issue. Outstanding stock is the difference between issued stock and repurchased stock held for resale. Issued stock is what the company has issued, which is less ...

    P/E Ratio vs. Bond Yield

    A standard characteristic of the investment markets is the inverse relationship between price-to-earnings (P/E) ratios and the yield on bonds. In the early 1980s, for example, interest rates were high -- between 10 percent and 20 percent. During that period, the average ...

    Do I Pay Capital Gains on Silver Bars I Just Sold?

    Silver bars are capital assets just like other investments. Unless you invested using a tax-deferred account such as an IRA, you have to report investment profits to the Internal Revenue Service when you sell silver bars or other forms of precious metals. However, the IRS treats ...

    How to Find the Percent of Share Price to Net Asset Value

    An investment fund pools investors’ money together to purchase investments, such as stocks and bonds. Shares in certain types of funds, such as closed-end funds and exchange-traded funds, trade on stock exchanges. These share prices are based on supply and demand and can ...

    How to Get Periodic Return From Stocks

    The periodic return from stocks calculates the stock's growth for a given period of time. This offers a metric of performance for the stock and may be calculated for several consecutive periods. Multiple period returns highlight stable, accelerated or diminished growth across ...

    What Are Pink Sheet Equities?

    The Pink Sheets is an online quotation service, now called OTC Markets Group, Inc. It provides price information on stocks that either can't qualify to trade on a national exchange, or have elected not to report to the SEC. Some of the stocks quoted by the OTC Markets Group are ...

    What are Pooled Investment Accounts?

    Ways to invest your money can be divided into two paths — the direct ownership of securities such as stocks and bonds, or through pooled investments where you earn a proportional share of the profits and income earned by the pooled assets. Some types of pooled investments ...

    Why Preferred Stock Is Considered Debt

    Companies issue preferred stock and bonds to raise capital for strategic and operational needs. Preferred stockholders have preference over common shareholders in terms of corporate assets and earnings. Preferred stock is considered a form of debt because it issues regular ...

    What Is Preferred Stock With Finite Lives?

    Preferred stock is simply a share of stock whose holder has the right to be paid any dividend ahead of common stockholders. They are a special class of investing assets in that they combine elements of equity ownership with elements of income-oriented securities, such as bonds. ...

    Why Is Preferred Stock Often Referred to As the Hybrid of Common Stock & Debt?

    Investors usually look for equity growth, income or a combination of the two. If you are trying to grow the value of your portfolio, odds are good you’ll include a selection of common stocks. Conversely, if you want current income you are more likely to invest in ...

    Preferred Stock Vs. Bonds

    Preferred stock is a special type of ownership stake offered by some companies that also issue common stock. When you purchase a bond, by contrast, you are loaning money to the issuer. Although the market behavior of these two financial products is similar at times, they each ...

    Does the Price of a Bond Increase as It Matures?

    Bonds represent money borrowed by a corporation or government. The borrowed money must be repaid when the bond matures. The approach of a bond’s maturity date may cause the price of a bond to increase, but it can also have the opposite effect. Whether the current price ...

    How Do Publicly Issued Bonds Work?

    There are three kinds of bonds: U.S. Treasury bonds, corporate bonds and municipal bonds. They share three features: credit rating, maturity date and coupon rate. All three also trade on the public bond market after they are priced by the underwriting syndicate. Pricing on ...

    Purpose of the Stock Market

    Stock markets are at the heart of the global financial system. Businesses need the stock markets to raise capital. Individuals, charitable foundations, pension funds and other investors access the markets to buy and sell the stocks of these businesses. Regulators are there to ...

    How Does a Put Option Work?

    A put option is a security with a dual personality. You can trade put options for profit, but you must accept considerable risk. On the other hand, traders often use put options primarily as a risk-reducing strategy to protect the value of other investments. Puts are often ...

    How to Put Upper & Lower Limits When Selling Stocks

    Upper and lower limits on sell orders can protect capital gains and prevent substantial losses in fast-moving markets. Selling stocks is an important part of portfolio rebalancing. This involves reducing positions when prices are ahead of the underlying fundamentals or when ...

    How Do Qualified Tax Credit Bonds Work?

    The first tax credit bond was a result of the Taxpayer Relief Act of 1997. Subsequent congressional acts, including the American Recovery and Reinvestment Act of 2009, allowed governments to issue additional tax credit bonds. Although these certificates are not tax-exempt, ...

    Does the Rate on a Savings Bond Fluctuate With the Market?

    U.S. savings bonds are among the safest of investments, backed by the full faith and credit of the United States government. They pay interest for 30 years. There are two types of savings bonds available, Series I and Series EE. The interest rates on both bond series change in ...

    How to Read EPS on Stock Quotes

    A company’s earnings per share, or EPS, is a key financial metric on its income statement that investors and analysts use to assess its performance and stock price. EPS is the net income, or profit, a company generates during a period for each share of common stock it has ...

    How to Read the Yield Curve

    The yield curve shows the relationship between interest rates and time to maturity of short- and long-term U.S. Treasury bonds. The yield on a bond is the return on investment you would expect if you were to hold it to maturity. Use the shape of the yield curve for making asset ...

    Reasons to Invest in a Company

    While there are many ways to invest your money, investing in a company is among the most potentially profitable. Every investment carries some risk, and investing in a company is no different. However, investing in a company can be a good idea for a number of reasons, whether it ...

    Reasons Stocks Become Undervalued

    Undervaluation means that a stock's market price is below what it is worth. The main reason for undervaluation is that the markets often shoot first and ask questions later. This means that markets often punish stocks in entire industry sectors at the slightest hint of adverse ...

    How to Recover Lost Bonds With the US Treasury

    If you lose a U.S. Treasury bond, no worries. The Treasury has a system in place for replacing savings bonds to their registered owners, depending on whether you lost the bond after it was in your possession or you ordered the bond but never received it. You can opt to receive a ...

    How to Redeem Double H Bonds

    Series HH U.S. Savings Bonds are a variable rate 20-year paper savings bond last issued in September 2004. With these current-income bonds, the initial interest rate is reset to market rates after 10 years. Interest is paid to the bond owner every six months by check or direct ...

    The Redemption of Bearer Bonds

    Bearer bonds are a type of negotiable security that originated in the United States probably during the Reconstruction era following the Civil War. Most bonds are registered to a specific owner. The ownership of a bearer bond is not registered with the bond issuer, so the person ...

    Reinvesting in Similar Stocks

    You can take some of the sting out of a drop in your stock prices by selling your stock and deducting the loss on your taxes. But if you still like the stock and think it has the potential to rally, you might be tempted to sell it for the tax loss and buy the same stock back at ...

    REIT vs. REIT ETF

    The term "REIT" stands for "real estate investment trust." These are corporations that invest primarily in rental real estate, though some entities, called "mortgage REITs," buy pools of mortgages. Individual REITs receive favorable tax treatment, ...

    The Relationship Between Net Income & Owner's Equity

    Net income is the portion of a company's revenues that remains after it pays all expenses. Owner's equity is the difference between the company's assets and liabilities. It is the owner's share of the proceeds if you were to liquidate the company today. The relationship between ...

    How to Report Taxes of a Municipal Bond Bought at a Premium

    The major benefit of investing in municipal bonds is that the interest earned from the bonds is exempt from income tax. If you purchase a bond at a premium, the premium amount will eventually be lost when the bond matures at face value. The trade-off for paying that premium is ...

    How Is a Return on Equity Capital Calculated?

    Shareholders’ equity is the accounting value of the capital that shareholders have invested in a company. Investors trust a company to put their capital to good use and want to see it generate high returns. You can measure these returns using return on equity. This ...

    What Does a Reverse Merger Mean for My Stocks?

    A reverse merger happens when a publicly trading company merges with a private company and the private company survives, occupying and operating in the publicly traded company's legal shell. The private company takes over controlling ownership of the stock of the public company ...

    How a Reverse Split Avoids Delisting

    For a company, being "delisted" means having its stock taken off the exchange where it had been trading. Exchanges can delist stocks for several reasons, one of which is a low share price. To avoid the considerable damage a delisting can cause, a company may prop up a ...

    Is a Reverse Stock Split Good or Bad?

    Reverse stock splits boost a company's share price. A higher share price is usually good, but the increase that comes from a reverse split is mostly an accounting trick. The company isn't any more valuable than it was before the reverse split. Whatever value it has is just ...

    Rules for Cashing U.S. Saving Bonds

    U.S. residents might take advantage of the conservative and safe investments offered by the U.S. government. The Treasury Department guarantees that EE bonds held for 20 years will at least double in value. When you’re ready to cash in your investment, check out the rules ...

    Rules for Private Stocks

    The SEC has strict rules about how offerings of stock in a private company can be made and who may purchase the shares. Private stock is not registered with the SEC, and the companies are not required to report financials and key company developments. These disclosure ...

    How to Save for College With Pre-tax Dollars

    It's usually no problem finding a tax-advantaged college savings program that lets you save with after-tax dollars. The popular Section 529 plans, Coverdell education savings accounts and life insurance cash values all compound tax-free when used for qualified higher education ...

    Does Every Savings Bond Have a Different Interest Rate?

    If you have a collection of savings bonds, it may seem that each bond you own is earning a different interest rate. After decades of issuing savings bonds, the U.S. Treasury does have bonds in circulation with many different rates. The current rate system for savings bonds ...

    A Secured Bond Vs. a Cash Bond

    Businesses operate in large part on promises. Bonds are simply contracts that promise to pay -- or repay -- a certain amount of money or fulfill some other obligation. To protect the interests of the bondholder, though, bonds are often backed by something stronger than just a ...

    Secured Vs. Unsecured Corporate Bonds

    Corporations often borrow funds by issuing corporate bonds. Investors lend a company funds by purchasing the corporate bonds issued and become creditors for the corporation. The same company can issue different types of bonds simultaneously. Some may be secured, or senior bonds, ...

    How to Sell an Option Before It Expires

    Option contracts expire on fixed dates, which could be a few weeks to more than a year from when the contract is written. Expired option contracts have no value, which means that you have to sell or exercise these contracts on or before the expiry date to avoid losing your ...

    How to Sell Stock to Offset Gains

    When you sell an investment asset, such as stock, at a profit, the Internal Revenue Service assesses capital gains tax on the profit. However, the IRS taxes net profits, after you take losses into account, rather than gross profits. If you have sold stock at a profit and want to ...

    About Short-Term Bond Funds

    Mutual funds pool money from individuals to invest in a wide range of assets. Bond mutual funds specialize in bonds and other debt instruments. Depending on a fund's investment criteria, these bonds will have different risk characteristics, interest rates and number of years to ...

    Short-Term Vs. Intermediate-Term Bond Funds

    Bond funds are mutual funds that hold a variety of debt instruments issued by governments, corporations or investment firms. Bond terms vary in length from a few months to 30 years. Short-term bond funds largely contain bonds with a duration of 24 months or less. Intermediate ...

    How Should I Mail in HH Bonds for Redemption?

    The U.S.Treasury hasn't issued HH bonds since the end of August 2004, but the bonds still earn interest until redemption or maturity. The rate is fixed for the first 10 years, after which it changes to a new rate until maturity. Maturity comes 20 years after issue for bonds ...

    The Significance of After-Market Stock Prices

    Tracking stock prices is one way to determine the value of your investment. For most investors stock is a long-term commitment, so checking the share price every day isn't necessary. But in some cases, investors buy stock for short periods of time. This gives special meaning to ...

    What Are the Similarities Between Value Investing & Momentum Investing?

    Value investing and momentum investing are philosophies of investing that have many more differences that similarities. Investors and financial advisers utilize both investing strategies, and both strategies have endured to find their place among the many methods for making ...

    Simple Explanation of Stock Market

    Stock markets are essentially meeting places for companies and investors from all over the world. Companies need the markets to raise capital, while investors use them to attain financial goals, such as building a nest egg for retirement. Using online brokers and financial ...

    What Is SMA in Investing?

    Technical indicators use historical price and volume data to predict future prices. Investors use indicators to time market entries and exits, get a sense of short- and long-term trading ranges and detect turning points. The simple moving average, or SMA, is the average closing ...

    What Does SMA Stand for in Stock Trading?

    The share price of any stock tells you almost nothing by itself. You need to know the context, and probably the most basic piece of contextual information is the direction in which the stock price is moving. Is it rising, falling or holding steady? One of the most common tools ...

    Small Cap Private Equity Vs. Public Small Cap

    A small cap private equity investment requires that you have a close friendship or family relationship with one of the founders of the company or that you are an accredited investor. The transaction involves the issuance of a private placement memorandum, subscription agreement ...

    Do Sold Short Stocks Receive Dividends?

    All outstanding shares of stock are eligible for dividends, and that includes shares that have been sold short. What complicates things is that such shares have been borrowed from one party and sold to another, so each share essentially has two "owners" expecting a ...

    I Sold Stocks & Still Have Stocks, How Do I Prorate Costs?

    Tax reporting is often a headache for investors who sold stock during the year, because they must locate a record of cost for the shares sold. This is further complicated when you sell only some shares of a particular stock and keep other shares. To figure your gain or loss, you ...

    How Speculation Raises Shares

    Following the stock market for any length of time will show you how share prices rise and fall, just as the value of major indices rises and falls. Stock prices change for many different reasons, one of which is speculation. When investors speculate on stock prices, their hopes ...

    What Is a Stakeholder in Finance?

    Stakeholders are individuals and businesses with direct and indirect interests in businesses and other organizations. The stakeholders for privately-held and publicly-traded businesses include shareholders, employees, customers, suppliers, competitors, community leaders and the ...

    Stock Analysis: What Is a Price Target?

    The price target of a stock is the price at which the stock is fairly valued with respect to its historical and projected earnings. Investors can maximize their rates of return by buying and selling stocks when they are trading below and above their price targets, respectively. ...

    How Stock Market Averages Work

    Stock market averages, also called stock market indices, are important tools for investors who need to be mindful of market behavior. Market averages are published that follow the price trends for just about any market or business sector you can think of. A stock market index is ...

    Stock Market Opening Vs. Closing

    Investors buy and sell shares of a company on the stock market with the goal of maximizing profit. The price of the stock may fluctuate throughout the day. How the stock performs helps the investor decide if he wants to keep the stock or sell it. The buying and selling of stock ...

    What Is a Stock Option Award?

    Companies award stock options to recruit and retain key employees, executives and directors. These options give holders the right to buy the underlying shares at predetermined prices, known as strike prices, before specified expiration dates. The number of stock options awarded ...

    Stock Options Explained in Plain English

    Stock option contracts allow holders the right to buy -- for call options -- and sell -- for put options -- the underlying shares at specified strike prices on or before set expiration dates. Option holders can exercise their rights only at the strike prices. Stock options ...

    Does a Stock Price Fall When Dividends Are Paid?

    An investor who likes to keep a close eye on his stock prices will notice some interesting price action when a dividend is declared and earned. If you own dividend-paying stocks, you will want to understand what happens to the share price around those "ex-dividend" ...

    How to Get the Stock Price History From NSE

    The National Stock Exchange of India is a securities trading platform for various Indian equities, derivatives, mutual funds and other local securities. The NSE is one of the first Indian exchange companies to disallow NSE managers and owners from trading on the Exchange. NSE ...

    Does a Stock Price Typically Go Up After a Forward Split?

    Forward stock splits attract a lot of investor attention, so many companies use forward splits to develop more investor following for their stocks. Some companies regularly split their stock. They have large numbers of investors who happily accumulate large holdings of the stock ...

    Why Do Stock Prices Drop?

    Stock prices typically rise and fall with investor demand. Most investors buy shares in companies that have healthy balance sheets and strong market positions relative to the competition. Although short-term price drops are often due to day-to-day market volatility, companies ...

    What Makes a Stock Split?

    A stock split allows a company to increase the number of shares available for trading and cut the per-share price without diluting or reducing the value of current shareholder stake in the company. A company's stock splits only if the company wants it to. That decision typically ...

    How Does a Stock Split Affect Firms & Investors?

    A stock split is a share reorganization that changes the total number of a company's outstanding shares. Regular stock splits increase the number of outstanding shares and decrease the share price proportionately. For example, a 2-for-1 stock split doubles the share count and ...

    Does a Stock Split Affect Your Portfolio?

    When a stock splits, you receive more shares for each share of stock you own, without having to actually buy more stock. For example, with a two-for-one split, the most common type of split, you receive an additional share for each share you already own. At the same time, the ...

    How a Stock Split Affects a Shareholder's Equity

    A stock split is a corporate equity transaction that increases the number of shares outstanding while proportionally reducing the value per share. Companies can announce a stock split at any time. Stock splits aren’t unique to the United States; they happen in stock ...

    What Does Stock Split Mean?

    When companies declare stock splits, you end up with a different number of shares, but the value of your investment doesn’t change. If this sounds like a stock split is a public relations ploy, you’re right. Don’t dismiss the importance of stock splits, ...

    What Is a Stock and How Do Stocks Affect the Economy?

    Stocks represent ownership interest in companies and are important to individuals and businesses. Stocks are a key component of individual retirement portfolios. Businesses access the stock markets to raise capital for strategic and operational reasons. Stock prices influence ...

    What Are Stocks Called That Pay a Dividend on a Regular Basis?

    Dividend-paying stocks provide some attractive benefits to an investment portfolio. Dividends earned bring in returns to the portfolio when stock prices are flat or down. Also, with some stocks, dividends can provide a growing stream of income. Dividend-paying stocks are known ...

    Why Stocks That Have Exceeded the Sell Limit Price Do Not Sell

    Your stock brokerage account allows you to set up different types of orders to buy or sell stocks at prices set by you. It is possible for a sell limit order to be triggered and not sell your shares at the desired price. An understanding of how each order type functions will ...

    What Is Strategic Portfolio Rebalancing?

    Strategic portfolio rebalancing is the buying and selling of financial assets to restore a portfolio's target asset mix. Financial assets include stocks, bonds, derivatives, mutual funds and money-market securities. Retired individuals may prefer an asset mix weighted toward ...

    Support and Resistance Levels for Stocks

    Technical analysis of the stock market is the study of stock prices for indications of where the prices will go in the future. The concepts of support and resistance levels are basic building blocks of the technical analysis of stocks. Even if you are an investor who buys stocks ...

    What Do the Symbols & Abbreviations in the Stock Market Mean?

    Symbols and abbreviations are shorthand forms of financial communication between market participants. Abbreviations are standardized short forms of financial concepts and terms. Symbols are usually three- to four-letter codes that identify publicly traded securities. Media ...

    Systematic Investment Plans

    For an investor who does not have a large investment portfolio, the use of a systematic investment plan is one path to achieving wealth over time. A systematic plan uses several proven investment concepts, such as compound growth and dollar cost averaging, which could produce ...

    Tax Benefits of a Brokerage Account vs. Roth IRA

    Traditional individual retirement accounts and brokerage accounts are taxed under two different systems: IRA accounts fall under income tax rules, while investments in brokerage accounts held outside of IRA accounts generally fall under capital gains tax rules. However, Roth ...

    Tax Efficient Investing

    Every penny you pay the government in taxes represents one less penny you can keep for yourself. Although the U.S. tax code is complicated, its complexity can actually work in your favor if you know how to take advantage of loopholes and built-in investment benefits that other ...

    Taxable vs. Non-Taxable Bonds

    A major investment choice comes when you must decide between bonds paying taxable interest and those that are exempt from income tax. Bonds have different features, liquidity and credit quality. Your personal tax situation will make one type or the other a better choice for you.

    Tax-Advantaged Investment Options

    The ultimate tax-advantaged investment option might be life insurance, because any proceeds paid out due to the death of the insured are not taxable and don't have to be reported with the beneficiary's gross income. The only problem is you have to die before it pays off. ...

    Taxation of Covered Calls

    The covered call strategy has several moving parts, all of which affect the taxes you need to pay on your profits. Understand the situations that cause you to pay more taxes than necessary, and the records that are required to file your taxes.

    Taxes on Mutual Funds and Capital Gains

    Mutual funds provide investors with many benefits that include professional management, diversity and access to securities that are prohibitively expensive for many individual investors to buy. On the downside, mutual funds can create tax complications. Some investors end up ...

    Taxes on Stock Holdings

    While there are plenty of investment strategies for making money in the stock market, the two primary sources of income from your stock holdings are dividend income while you own your stocks and capital gains when you sell them at a profit. Not all stocks pay dividends, and it ...

    How to Tell How Much Scrap Gold Is Worth

    Selling unwanted gold jewelry as scrap gold is a way to put a few extra bucks in your pocket. If you have pieces of gold jewelry you are considering selling, you may want to get an idea of what they are worth. You need a few pieces of information and basic calculator math to ...

    Ten Rules for Investing in Silver

    If you’re new to the silver market, it pays to read books like Arik Zahb’s “Rules Used By Profitable Futures Traders to Investing in Gold and Silver.” While you're at it, seek out articles and tomes authored by David Morgan. His seminal work, "The ...

    The Terms for Buying Stock on Credit

    Borrowing money -- using credit -- to buy stocks allows you to leverage the gains from the stocks you buy. However, leverage is dangerous to an investor's net worth if the stocks go down in value. The Securities and Exchange Commission has set up a system which brokers use to ...

    Why Is There an Inverse Relationship Between Bond Yield and Prices

    Any time a bond’s price changes up or down, the yield changes in the other direction. Understanding why there is an inverse relationship between bond yields and prices is important, because it’s a basic characteristic of the way bonds work. It’s also useful to ...

    Things You Didn't Know About the Stock Market

    Investors know that thousands of companies trade on stock markets around the world. Trading starts in Tokyo on Sunday evening and continues almost non-stop right until the final bell sounds on the New York Stock Exchange on Friday afternoon. Successful investing requires ...

    Three Factors That Affect a Call Option's Value

    At first glance, the price of a call option might not make a lot of sense. On the listed options chain for a particular stock, there will be call options priced at less than $100 per contract up, and others that cost thousands of dollars. The factors affecting the price of a ...

    The Three Key Elements of an Investment Bond

    There are three kinds of bonds: U.S. Treasury bonds, corporate bonds and municipal bonds. There are three elements you must look for when purchasing a bond, and each of these types has all three elements. Depending on the particular bond, other important features should be ...

    Trading Stocks and Knowing When to Sell

    To make money in stock investing, you have to know when to hold your stocks and when to fold them. Profitable investing is about allocating hard-earned dollars where they are likely to generate the highest returns. Forming an emotional attachment to stocks could mean holding ...

    What Is a Treasury Bill, a US Savings Bond & a Revenue Bond?

    Common stock is easy to understand, but when it comes to fixed-income instruments, the variety of types and features can get confusing. These conservative investments are each appropriate for particular investment strategies. Treasury bills are short-term investments, maturing ...

    How Treasury Bonds Work

    U.S. Treasury bonds are debt instruments issued by the United States government. When you buy a Treasury bond, you are loaning money to the government in exchange for a promise to repay you with interest. Historically, U.S. Treasury bonds have been considered to be among the ...

    Types of Investment Instruments

    Investors can choose from a wide range of assets for their investment portfolios. The two basic types of investment instruments are fixed-income and equity. Fixed-income assets provide relative safety of capital and regular interest payments, while equity provides the potential ...

    How Do United States Savings Bonds Mature & What Are They Worth?

    U.S. savings bonds are a popular savings and investment vehicle that offer safety, security and a rate of return comparable to many other savings and investment programs. The current Series EE savings bonds mature at a steady and predictable rate and are backed by the full faith ...

    What Makes Up the NASDAQ Composite?

    You will see the current values for the three major stock indexes, the Dow Jones Industrial Average, the S&P 500 and the NASDAQ Composite, on the Home page of any major financial website. As the youngster of the major stock indexes, the NASDAQ Composite is often viewed as an ...

    Variable Annuities Vs Mutual Funds

    Variable annuities and mutual funds contain many identical features that can make the two products difficult for inexperienced investors to distinguish. If you are considering investing in an annuity or mutual funds, you must learn the differences between them and understand how ...

    The Virtues of Long-Dated Call Options

    The stock market offers plenty of opportunity for profitable investing, but all potential rewards come with a certain amount of risk. When it comes to buying individual stocks, your potential reward is theoretically unlimited, since there is no limit to how high a stock's price ...

    The Weaknesses & Strengths of a Certificate of Deposit

    A certificate of deposit is a special type of deposit account that pays regular interest and guarantees the original investment back after maturity. CDs typically offer higher interest rates than regular savings or checking accounts, but you would incur penalties if you cash in ...

    How to Get Your Wife to Invest

    You can help your wife develop an interest in investing if you focus on the positive aspects of having money in the markets. She will be more likely to become interested if she understands the benefits to her and the financial freedom that comes with successful investing. Help ...

    Why Would the Stock Market Undervalue Some Firms?

    Investing in the stock market carries more risk than investing in bonds or government securities. Although stocks do not guarantee a specific return rate, the rate is usually higher than investments that carry less risk. Stock prices reflect the value of a company in terms of ...

    Yield-to-Call Vs. Yield-to-Worst

    Investing in individual bonds can be more complicated than it seems at first. There are premium bonds, selling for more than the face amount and discount bonds selling for less. Calculations, such as the yield-to-call and yield-to-worst, allow you to compare bonds and select the ...

    Difference Between a Call Option & a Long Position

    Investment derivatives -- assets that derive their value from something else -- have an expansive vocabulary to describe different types of contracts and what you can do with them. Call options are a particular type of asset, while a long position is one way to hold a call. ...

    Explanation of After Tax-Equivalent Yield

    There is a very strong appeal to earn tax-free interest from your investments. No one likes paying income tax and paying a chunk of your interest earnings to the Internal Revenue Service puts a big dent in your portfolio returns. Yet investments that come with taxable interest ...

    How to Look at Financial Statements to Invest in Stocks

    Financial statements include the income statement, balance sheet and statement of cash flow. They contain current and prior-period results, as well as supplementary notes and management's analysis of current and future business conditions. The statements are useful for analyzing ...

    How to Change Ownership of EE Savings Bonds

    U.S. Treasury EE savings bonds are the U.S. savings bonds that are often advertised and commonly sold through banks. These low-risk savings bonds are also easy to transfer to a new owner for any reason. The bond is actually reissued rather than changed, and all that a present ...

    Difference Between Equity & Fixed Income

    When it comes to investing, you have two primary choices: equities or debt securities. In a nutshell, equities are things you own, such as stocks, and debt securities represent a loan that you expect to be repaid with interest. Debt securities are sometimes referred to as fixed ...

    Can I Convert My EE Savings Bonds at a Bank?

    You may already know that the U.S. Treasury no longer issues paper savings bonds. Instead, new bonds are issued electronically through the TreasuryDirect website. Although you can still cash paper bonds at most banks, banks no longer sell bonds, and they cannot convert your ...

    Different Categories of Stocks

    With more than 5,000 different companies listed on the U.S. stock exchanges, the stocks of these companies can be categorized in many different ways. Differentiating features include types of shares, size of a company and type of business. Investors with an understanding of ...

    What Is Undervalue or Overvalue of Stocks?

    When stock analysts talk about a stock being either undervalued or overvalued, they're most likely using any one of many valuation models that attempt to predict a stock's direction. Undervalued stocks are expected to go higher; overvalued stocks are expected to go lower, so ...

    Can You Track Down a Savings Bond Using a Serial Number?

    When you hold a collection of savings bonds for a number of years, you can have trouble keeping track of the bonds you have and bonds you've already redeemed. The federal government makes it simple to track down a savings bond using a serial number. As long as you have this ...

    When Is Withdrawing From an Annuity Taxable Income?

    When you invest in an annuity, you aren't locked in. You can end the contract early and take your money out with a withdrawal. When you take a withdrawal, through, the IRS will charge tax on some part of the money. You could also get hit with extra fees on top of the income tax ...

    What Kinds of Savings Bonds Should I Buy for College Savings?

    The average cost of a year's worth of undergraduate tuition and room/board at a public four-year university was $6,320 in 1980, according to the National Center for Education Statistics. By 2010, the price tag had increased to $14,870. College is expensive. The sooner you start ...

    Roth IRA vs. 529 for College Savings

    Both the Roth IRA and the 529 plan formats allow for investors to build funds to pay for college expenses. However, the 529 plan is designed specifically to fund college tuition and other expenses, while the Roth IRA is tailored to provide a source of retirement income. ...

    Is Total Assets Equal to Total Equity?

    A company’s total assets equal the total liabilities plus the total stockholders’ equity on the balance sheet. Assets are a company’s resources. Liabilities are the debts used to fund assets. Equity represents money contributed from stockholders and reinvested ...

    What Is a Stock Market Correction?

    When you examine stock market charts, you can see that stock prices never go up in a straight line. They rise and fall on their way to higher prices. Experienced investors consider this normal. However, you may also notice larger dips in some places, indicating that people began ...

    Day Trading Margin Vs. Maintenance Margin

    Buying and trading stocks in a brokerage margin account allows you to increase the returns on your invested money. While a margin account gives you added flexibility, borrowing money to buy stocks can get you in trouble if you do not understand the margin rules. The Securities ...

    How to Calculate the Present Value of a Growing Annuity Using the Future Value

    A growing annuity is a series of increasing, periodic cash flows that grow at a fixed percentage. For example, you might deposit money into an account each year for five years. If each deposit is 5 percent greater than the last, the series of deposits is a growing annuity. The ...

    The Formula for Interest Revenue Accrued on a Bond

    Although a bond might pay interest only semiannually or at some other interval, the interest revenue, or income, accrues daily. When you buy or sell a bond in between its interest payments, you must account for the interest that has accrued since the last payment. Bond prices ...

    Can Long-Term Capital Loss Offset Short Term Capital Gains for Tax Purposes?

    When you buy stocks, you must keep track of how long you hold them. The Internal Revenue Service treats long-term stocks differently from short-term stocks. When you hold a stock for a year or less, you categorize it as a short-term stock. Stocks you hold longer than a year ...

    Stock Market Risk & Return

    Stocks are equity investments, which means that when you buy a share of stock you actually own a piece of the company that issued the stock. Each share of stock represents the same amount of ownership as every other share of stock, and it gives you the right to participate in ...

    What is a Straddle Position in Stocks?

    A straddle position in stocks involves options. Call and put option contracts give holders the right to buy and sell the underlying shares for a predetermined price, known as the strike price, before specified expiration dates. You can use options to hedge against losses or to ...

    Advice Regarding Front-Load Mutual Funds

    A front-load mutual fund charges you a sales commission at the time you purchase the fund. When mutual funds were first invented, all funds were front-load mutual funds. As the industry developed, other pricing structures were implemented, such as back-end load funds, level-load ...

    What Are the Advantages of Owning Individual Stocks vs. ETFs?

    Stocks represent ownership interest in companies and trade on regulated and over-the-counter markets. Exchange-traded funds track market indexes and trade on the markets just like stocks. ETFs offer broad diversification at reasonable cost. Stock picking is active investing ...

    What Does It Mean if a Stock Price Goes Up or Down With Little Volume?

    A stock moving up or down on low volume is usually a warning sign: proceed with caution. It may mean a move you cannot trust: market uncertainty, manipulation or a thinly traded, volatile stock that is generally riskier to trade than high-volume stocks.

    How to Turn in Matured US Savings Bonds

    Back in the day, redeeming savings bonds required taking the paper bonds to a bank and requesting their redemption value in cash. Though a certain comfort lies in exchanging one form of paper for another, today a seamless, more "green" electronic process is in place. ...

    How to Find Return on Equity

    A company funds its business using either debt or equity. Liabilities on a company’s balance sheet represent creditors’ claims on the company, while stockholders’ equity represents stockholders’ stake. You can calculate a company’s return on equity ...

    What Is the Difference Between an IRA & a CD?

    An individual retirement account or a certificate of deposit allows you to earn interest today on money you'll use in the future. Banks offer multiple types of CDs, including traditional, bump-up and callable. Brokerage firms typically offer IRA accounts, although some banks and ...

    Can You Sell Call Options You Purchased?

    Buying call options gives you the opportunity to participate in the stock price gains of the underlying stock. You may want to lock in those gains when the stock goes up, and one way to do so is to sell your call options. You have several "options" when you want to ...

    6 Characteristics of Stock Markets

    Stocks are an important component of retirement plans and college education savings plans. Information technology has brought the markets closer to investors. You can find detailed financial information of listed companies online, usually at no cost. Online brokers have made ...

    How Real Stock Investors Make Money

    Stock investors make money by taking the time to understand the fundamentals of companies. They construct diversified portfolios to spread the risk among different asset classes and among several types of securities within each asset category. Successful investors refuse to ...

    Types of Losses in the Stock Market

    Investing in the stock market is risky. While you have an opportunity to earn unlimited profit, you also stand a chance of losing money. The Internal Revenue Service refers to an actual loss in the stock market as a capital loss. When you sell the stock for a loss, this is ...

    Retirement and the Stock Market

    Stock markets play a central role in retirement planning because they offer long-term capital gains and regular income. Investors can hold stocks directly or indirectly through mutual funds. If these investments are in tax-deferred accounts, such as IRAs and 401(k) plans, they ...

    How to Compare Two Stocks

    Choosing the best stocks can make the difference between earning or losing money. It’s easier to select a group of "buy" candidates than to decide which one of two stocks is best. Stocks can be compared on dozens, even hundreds of parameters. The key is to have ...

    Can Lost Savings Bonds Be Replaced Without Serial Numbers?

    If your paper U.S. Savings Bonds are ever lost, stolen or destroyed, you can obtain replacement bonds from the U.S. Treasury. The Treasury keeps records of the paper savings bonds it has issued, and it can search those records to replace your lost bonds. If you have the serial ...

    How to Buy Stock for Grandchild Without Opening a Broker Account

    Getting the young ones interested in investing can be a tall order. An excellent way to accomplish this is to give the gift of stock. Just a few shares of companies that are meaningful to a grandchild can help ignite an interest in how capital markets function. Those ...

    How to Buy Stocks After Hours

    The regular North American trading hours are from 9:30 a.m. to 4 p.m. Eastern time, Monday through Friday. Trading outside of this window is after-hours or extended-hours trading, which usually takes place from 7 a.m. to 9:28 a.m. and from 4 p.m. to 8 p.m. Eastern time. ...

    How to Find Savings Bond Serial Numbers if Bonds Have Been Destroyed

    Savings bonds provide a low-risk way to save money, but if you keep all of your bonds as paper bond certificates instead of digital bonds, there is a chance your bonds could get lost or destroyed. You won't lose your investment, however, and you can request new bond certificates ...

    How to Find the Total Number of Shares From a Balance Sheet

    You can find the total number of shares in the shareholders' equity section of a company's balance sheet, which also summarizes the assets and liabilities. The numbers of authorized, issued and outstanding common shares are listed in this section, along with the number of ...

    What Does NASDAQ Consist Of?

    The Dutch claim-shipping company Verenigde Oostindische Compagnie issued the world’s first stock shares, futures and options at the start of the 17th century, but according to World-Stock-Exchanges.net, the London Stock Market also claims to be the world’s first ...

    How Does a Company's Stock Increase in Price?

    A stock’s price is what investors are willing to pay for it. Investors commonly buy a stock when they believe its price is going higher, hoping to sell it at a profit later. Some of their reasons are pretty straightforward; others might surprise you.

    What Is the Difference Between the Futures Price & the Value of the Futures Contract?

    Investors new to the futures markets might notice the lack of uniformity concerning prices and values of different products. This is the result of the wide range of commodities and financial instruments against which futures are traded. Each futures product -- such as corn, ...

    Who Buys Stocks When You Sell?

    If you believe you are doing the right thing by selling a stock, and if the customer believes he's doing the right thing by buying it, one of you must be wrong. You will never know exactly who is on the other side of the transaction, but trying to understand who is buying from ...

    Do Bonds Pay Dividend or Interest?

    Bondholders receive interest for the bonds that they purchase -- not dividends. Because bondholders are lending money to entities when they purchase bonds, these interest payments resemble the interest that homeowners pay on their mortgages or that credit card owners pay credit ...

    How to Determine When a Savings Bond Matures

    The U.S. Department of the Treasury sells savings bonds to raise funds for the federal government. The U.S. savings bond is a debt security that is considered a safe investment since it is backed by the U.S. government. Savings bonds that have matured have stopped earning ...

    What Does Volume Mean When Trading Stocks?

    Imagine if you knew the amount of demand for a particular product or service. If it had a high demand, you might try to buy and then sell it to make a profit for yourself. In stock trading, volume refers to the number of shares that exchange hands from buyer to seller over a ...

    Advantages of Investing in Emerging Markets

    The emerging markets refer to countries that have started to industrialize but have not yet achieved the financial maturity and stability of developed nations. Common examples of emerging nations are China, India, Brazil and South Africa. These nations are experiencing rapid ...

    What Is an FHLB Bond?

    Investors looking for a way to combine investment growth with the support of local economic development may be interested in learning more about FHLB bonds. FHLB is an acronym for the Federal Home Loan Bank, a government-sponsored enterprise devoted to fostering affordable ...

    About 529 Plan Withdrawal

    Two types of 529 plans allow account-holders to invest money in a plan for future college expenses, with tax advantages. The 529 plan variations are the prepaid tuition plan, which allows for the purchase of units or credits for tuition and fees at locked-in rates at qualifying ...

    Can I Buy Stock Before the Market Opens?

    Traditionally, investors could only buy and sell stocks, bonds, currencies and other financial instruments during business hours. With the advent of electronic trading, however, certain financial products can be bought and sold any time. While pre-market and after-market trades ...

    What Is the Meaning of an IPO in the Stock Market?

    You can't trade stocks for very long without hearing a hot tip about a company that is getting ready to go public with an IPO. You might hear that if you get in on the ground floor, you stand to make a killing in the market. Well, maybe. But initial public offerings, or IPOs, ...

    How to Transfer Shares of Stock to Another Person

    Transferring stock to another person is easy. Most companies provide a link with stock transfer instructions on their websites or direct you to a stock transfer agent who handles stock transfers for the company. There are no tax implications for the recipient when the shares are ...

    What Is the Difference Between Bid Size & Ask Size?

    Bid size and ask size indicate how many shares investors are looking to buy or sell at a specified price. Differences between the bid and ask sizes can provide valuable clues as to the short-term direction of a stock.

    How to Determine Resistance Points on a Stock Chart

    Determining resistance points on a stock chart can help you better time your trades to maximize profits and avoid pitfalls. Resistance refers to a price level above which a stock may have difficulty rising, at least in the short run – that is, its advance is experiencing ...

    Premium Vs. Discount Bonds

    Premium and discount refer to the price of a bond and can often mean the difference between a gain and a loss on your investment. But the correlation is not always straightforward: You can lose money in a discount bond and profit from owning a premium bond.

    Risks and Benefits of Mutual Funds

    A mutual fund is a type of investment that pools money from many investors and uses the funds to buy a portfolio of stocks, bonds and other assets. Individual investors buy shares of the mutual fund rather than shares of the assets the fund holds. Share price is based on the ...

    What Is Convertible Redeemable Preferred Stock?

    Companies issue stock to raise money to invest in their business and to finance new initiatives. When investing in companies, you can take advantage of the various types of shares and how companies have structured them to match your investment goals. Convertible redeemable ...

    The Impact of Institutional Investors on the Price of a Stock

    Institutional investors have a profound impact on stock prices because they account for most of the trading, their buying can send a stock price up and their selling can send a stock price down. Institutional talk can also affect stock prices, although its impact is likely to be ...

    Can a Lost Stock Certificate Be Replaced?

    Though many people buy stocks online and never receive physical stock certificates, some investors prefer to keep physical copies of their stocks. Stock certificates can be damaged or destroyed and also are at risk of being lost or stolen. If you need to replace a lost stock ...

    Shares Outstanding Vs. Float

    Shares outstanding are the total number of shares issued by a corporation. Float is the percentage of those shares that is in the hands of investors and can be freely traded. Comparing the two can give you valuable clues about a stock’s potential performance and help you ...

    What Is the Dow Futures?

    If you've ever listened to an early morning financial news broadcast, you've heard a reference to "futures" and how they affect the stock market before it opens. Investors follow the futures because it provides an indication of where stocks are headed at the opening ...

    Why Does the Stock Market Fluctuate?

    The stock market is not a single entity, but rather a reference to every stock of every company, public or private, whether listed on a stock exchange or traded over-the-counter. It includes companies from around the corner, and in our global economy, from around the world. The ...

    Acceptable Forms of ID to Redeem a Savings Bond

    You can redeem EE or I savings bonds any time after they're one year old, but the Treasury subtracts three months' interest if you cash them before five years. Redeem electronic bonds online at TreasuryDirect to receive payment within one business day in your bank account. Take ...

    Does Restricted Stock Expire?

    As a bonus to valued employees, companies grant restricted shares of stock in certain situations that cannot be sold or traded until a holding period has ended. Even after that period has passed, some restrictions may remain on the sale of those shares. While there are ...

    Pros & Cons of the Stock Market

    Successful stock investing requires a willingness to accept the risk that the shares you buy may decline in value. Investors should also have a keen interest in the factors that affect stock prices -- those related to the individual company and to the economy as a whole. This ...

    The Difference Between Classes A, B, and C Mutual Funds

    Mutual funds, which are investment funds that invest in a diversified portfolio that may include stocks, bonds, real estate or commodities, offer a range of opportunities to investors with different goals and different amounts to invest. Some funds issue different types of ...

    How to Calculate EPS With Basic & Diluted Common Stock

    Earnings per share measures the amount of income a company generates per share of stock outstanding. In general, the higher the EPS, the more valuable the stock. However, investors make two different EPS calculations: basic EPS and diluted EPS. Basic EPS measures the earnings ...

    Types of Savings, CDs, Bonds & IRAs

    Savings accounts, certificates of deposit, bonds and individual retirement accounts represent some of the numerous ways you can invest your money. Even within one category of investments there can be many different types of accounts, each possessing different risk and return ...

    How to Look Up Savings Bonds

    Buying savings bonds provides a secure investment, but does not offer the same rates of return as more risky investments like mutual funds or stocks. After you purchase the U.S. savings bonds, interest accrues, but you do not receive the interest until you cash in the bonds. You ...

    How to Find Stockholders' Equity Mathematically

    The stockholders' equity in a company measures the amount of money left over for the stockholders if the company were liquidated. The higher the shareholders' equity, the more money each share in the company would receive. Stockholders' equity is one important factor in ...

    The Purpose of Repurchasing Shares

    Companies can repurchase their shares in regular market transactions or by making tender offers to shareholders. They can retire these repurchased shares or hold them in a treasury stock account. Companies announce their repurchase programs through press releases, usually at ...

    How to Calculate Percentage Increase of a Stock Value

    It is a good feeling -- and good for your portfolio value -- when the share price of a stock you own goes up in value. As an investor, it is helpful to keep up with the percentage gains on different stocks. Calculating the percentage increase of a stock is a quick and simple ...

    What Is the Face-Value Maturity Period for Series EE Bonds?

    Series EE U.S. savings bonds are debts of the U.S. government. They are backed by the full faith and credit of the United States, so your investment principal has the highest degree of protection. They are bought by people who value investment safety. As bonds, these securities ...

    What Is the Inverse of an Earnings Multiple?

    Investors use several valuation measurements to evaluate the investment potential of a stock. A share price on its own means little with analyzing that share price in relation to the company's earnings, rate of growth and dividend payments. The earnings multiple is a measurement ...

    Can You Invest Against U.S. Treasury Bonds to Make Money?

    An investment against Treasury bonds is an investment for rising interest rates. If long-term interest rates increase, the market price of Treasury bonds will decline. The investment markets and exchanges offer a couple of ways to "short sell" Treasury bonds and profit ...

    Are Hedge Funds Marketable Securities?

    In finance, "marketable securities" refers to financial instruments that can easily be sold for cash. A hedge fund is an investment fund that strictly limits who can participate -- and, as a result, is subject to less regulation than mutual funds or other investments ...

    What Can Affect a Return on Common Stockholders' Equity?

    Return on common stockholders' equity, commonly known as return on equity, measures a company's ability to generate a return on the investment of common stockholders. ROE is the ratio of net income to average common equity. Investors use ROE in combination with other financial ...

    The Offering Price vs. the Opening Price of an IPO

    The offering price of an IPO is the price at which a company sells its shares to investors. The opening price is the price at which those shares begin to trade in the open market. The difference between the two is the amount of instant profit or loss for investors in that ...

    NASDAQ vs. New York Stock Exchange

    The New York Stock Exchange and the NASDAQ are businesses where stocks are bought and sold and trading transactions are managed by licensed professional brokers. Each exchange represents a portfolio of companies and measures its portfolio's performance through the indexing ...

    High Dividend Yield vs. Low Payout Ratio

    Dividend yield indicates how much income you should expect to receive if you buy a stock at the current price; dividend payout ratio indicates how safe the dividend is. Ideally, you want the highest dividend yield with the lowest payout ratio, but these two parameters are often ...

    "A" Share Class Vs. Institutional Share Class

    A fund sponsor may offer a single mutual fund with several different classes of shares. An investor researching a specific fund may be attracted to the lower expenses and better performance of the institutional class shares. However, when the investor asks her broker about the ...

    Bonds vs. CDs for Long-Term Savings

    Certificates of deposit and bonds are two types of debt securities. These instruments typically appeal to investors who are seeking income and are concerned with principal preservation. Despite the many similarities between these investment vessels, there are both advantages and ...

    What Is the Lowest Dollar Amount for a Savings Bond?

    U.S. savings bonds provide an opportunity to start saving with a small amount of money. Savings bonds are savings certificates issued by the U.S. Department of the Treasury. Bonds earn interest every month for up to 30 years.The U.S. Treasury has set different minimum purchase ...

    What Are the Two Types of Return Common Stockholders Receive for Their Investment?

    Common stockholders receive their returns in dividend income and capital appreciation. Dividend income puts cash in their pockets; capital appreciation means stock price increases over time. Most stock returns come from capital appreciation, but the dynamic between growth and ...

    Do Rising Interest Rates Negatively Affect Stocks?

    Rising interest rates can negatively affect stocks, at least in the short term. In the long term, the answer is less clear because stock prices depend on interest rate changes as well as other factors. These include economic indicators, such as employment and corporate earnings, ...

    Liquidity Risk of OTC Stocks

    Liquidity means how easily you can sell a stock without the transaction affecting the current stock price. Liquidity risk is high if there are no buyers for your shares at the current price, and you have to wait a long time to sell your shares, or have to accept a lower price. ...

    Objectives of Mutual Funds

    As of 2012, there are more than 7,000 mutual funds in the U.S., worth about $12 trillion, according to the Investment Company Institute. Choosing the appropriate fund to meet your investment goals can be daunting. As a matter of law, mutual funds are required to state their ...

    Mutual Funds vs. Fixed-Income Securities

    A big selling point of mutual funds is that they offer the benefit of diversification as opposed to buying individual securities such as stocks. If you invest in fixed-income securities such as a bond, you receive periodic interest payments. However, you can also invest in a ...

    Five Key Points to Consider Before Investing

    Where to put your money is a critical decision for investors everywhere. Financial goals, investment knowledge and stage of life all impact investment decisions. While it is easy to get caught up in media hype surrounding a "hot" opportunity, don't make the mistake of ...

    How Much Money Can You Put Into a 529 Plan?

    Qualified tuition plans -- also known as 529 plans, named after the section of the Internal Revenue Code that governs them -- are financial accounts designed to provide a tax-advantaged way to save for college. There are the two types of 529 plans: college savings plans and ...

    What Is the Difference Between Derivatives & Stock Options?

    Derivatives are financial instruments whose price is dependent on the value of some underlying asset or indicator. A stock option is a particular kind of derivative, one that allows the holder to buy or sell stock. All stock options are derivatives, but not all derivatives are ...

    Alternatives to Savings Bonds for Kids

    Series EE and Series I savings bonds are one of the few investment securities children can own in their own names. The full faith and credit of the U.S. government backs the interest and principal on U.S. savings bonds, making them among the safest of all investments. Although ...

    Friendly Takeover vs. Hostile Takeover

    The shares of a publicly traded corporation can be purchased by a variety of people and organizations. Consequently, a shareholder or a group of shareholders can accomplish a takeover by purchasing a large percentage of a corporation's shares. The terms "friendly ...

    How to Place a Pre-Market Order

    Pre-market trading takes place before the regular market opens at 9.30 am Eastern time. Most broker trading platforms let you participate in pre-market trading. Your order must be placed during pre-market trading and clearly marked “pre-market,” otherwise it will be ...

    What Is an Investment Dividend?

    When you buy company shares, you obtain two primary benefits -- you are entitled to any dividends issued by the company, and you can sell your shares. Some companies rarely declare dividends, choosing instead to reinvest their cash into the company. However, in some cases you ...

    How Does a Covered Call Strategy Increase Your Taxes?

    The nature of covered call trading will produce quick, relatively small and taxable profits. There are a couple of pitfalls with writing covered calls that could result in higher taxes than you really need to pay. Watch out for these problem areas and keep your trading-generated ...

    Actual vs. Target Price in Stocks

    "Actual price" is the price at which a stock is currently trading; "target price" is what somebody thinks the stock is worth or could sell for in the future. The larger the difference between the two, the more it motivates investors to act. But you have to be ...

    The Important Stock Markets & Exchanges

    Stock markets are regulated forums that bring together individual and institutional investors with businesses that need capital. These markets play an important role in the retirement plans of citizens of developed and emerging economies. Stock exchanges work with national and ...

    Position Trading vs. Swing Trading

    The basic premise of stock trading is that stocks move in trends. Once a trend starts, it is likely to continue. Traders make profits by recognizing a trend early, buying a stock for the duration of the trend and selling as soon as it has run its course. Both position and swing ...

    Dividend Stocks vs. Inflation

    Inflation can erode your purchasing power over time, especially if you're on a fixed income. Carefully selected dividend stocks can provide a hedge against inflation by generating a rising income stream while appreciating in value.

    What Causes Stock Price Resistance?

    Resistance in technical analysis is a price level that a rising stock can’t seem to overcome. Once a stock reaches resistance, it often stalls and reverses. Resistance is caused by heavy selling that overpowers buying, and typically occurs at specific price levels.

    Can You Tell the Direction of the Stock Price by Looking at the Bid vs. the Ask Volume?

    The bid-to-ask volume can help you determine the way a stock price will head. Market participants leave behind footprints in the form of reported transactions. Analyzing the reported trades can tell you a lot about their action and its traders' state of mind -- and its probable ...

    How to Calculate the Average Yield on Investments

    The average yield on an investment typically refers to the income from an investment divided by the number of years you have held it. It is useful to calculate the average yield every few years to gauge whether an investment is adding value to your portfolio. You can express the ...

    Convertible Bond Vs. Callable Bond

    Bonds are a means of acquiring finance for the issuer and a means of earning income for the investor. Different provisions in the contract outline the obligations of the issuer to the bondholder and may extend certain special rights to the bondholder or the issuer. Knowing the ...

    How to Locate CUSIP Numbers for Municipal Bonds

    CUSIP stands for Committee on Uniform Securities Identification Procedures . A CUSIP number is a unique number that identifies a security. These numbers are assigned to United States and Canadian stocks and U.S. government and municipal bonds, as well as commodities and ...

    The Advantages of Small Investors in the Stock Market

    Small investors are those who don't want to sink large sums of money into stocks and other securities. They usually buy shares in smaller dollar volumes to reduce their exposure to the ups and downs of the stock markets or because they prefer to put their money into other ...

    Valuing a Bond vs. Valuing a Stock

    Investors may profit from bonds, stocks or a combination of both in their portfolios. It is important to know how to value each type of investment, because different factors determine the value of each. You can seek the best price if you know those factors. Be sure to keep the ...

    Is It Good to Invest in Stocks When the Market Is Down?

    While economists might quibble over the exact definition of a bear market, most financial professionals consider a 20 percent drop in the market from its previous high to be a pretty good indicator that the market is down. If you can manage to pick the bottom of a down market, ...

    Are Airline Stocks Cyclical?

    Cyclical stocks rise during the growth phase of an economic cycle and fall when the economy slows down or experiences negative growth, which is recession. Airline stocks are cyclical because leisure travelers and businesses cut back on travel plans when there is economic ...

    Dividend Stocks That Raise Dividends

    When carefully selected, stocks that raise dividends -- called dividend growers -- make an excellent core holding in many investment portfolios because they can provide a rising income stream while appreciating in value.

    What Is Conduit Financing?

    Conduit financing is a financing mechanism for private companies, non-profits and public authorities that funds projects through the issuance of tax-exempt municipal bonds. These are essentially revenue bonds and are also known as conduit, private activity or pass-through bonds. ...

    Can a Stock Price Fluctuate After Hours?

    With the advent of electronic trading, stocks now change hands 24 hours a day. Trades that occur before the market opens are known as pre-market, and those made after the major stock exchanges close are referred to as after-hours trades. Although the ability to trade at any time ...

    How to Research a Company's Financial Information for Investment Decisions

    When it comes to investing, you don't want to leave things to chance that you'll stumble upon a winning stock. If you want to join the ranks of investors who are willing to know all there is to know before making an investment decision, you're going to have to do your homework. ...

    What Type of Shares Are Dividends Paid On?

    For many investors, dividends are an important — if not the most important — component of investment returns. Dividends can be earned in a wide variety of ways. An investor who thinks only of stock shares when thinking of dividends may want to pursue some different ...

    Three Types of Hedge Funds

    Like holders of mutual funds, hedge fund investors pool their money in a portfolio of holdings managed by investment professionals. They are designed to achieve positive returns on principal, often using sophisticated mathematical trading strategies rather than simply investing ...

    How to Find Stocks Using CUSIP Number

    A CUSIP number is a unique nine-character identifier used to track stocks moving through the clearing and settlement procedures that occur during purchase or transfer. The CUSIP number is part of the Committee for Uniform Securities Identification Procedures system, which is ...

    Advantages & Disadvantages of Closed-End Funds

    Closed-end funds are investment companies that issue a limited number of shares that trade on an exchange like regular stocks and invest the proceeds in stocks, bonds or other financial assets. Closed-end funds’ unique features and structure can work as either advantages ...

    The Definition of Bond Yield in Finance

    Corporations and governments sell bonds to borrow money. Investors typically buy these bonds for the interest income they provide. "Bond yield" is the rate of return you can expect to make from a bond. However, there are several ways to measure bond yield, so there are ...

    The Difference Between Options, Futures and Forwards

    Options, futures and forwards all present opportunities to lock in future prices for securities, commodities, currencies or other assets. These instruments, known as derivatives, allow investors to hedge their price risk, or to speculate on price movements. The key difference is ...

    What Is the Difference Between an Ex-Dividend & Record Dates?

    Some investors rush to buy dividend stocks in time to receive the next dividend. They discover they bought too late. Stock exchanges have strict rules about who qualifies for a dividend, and the companies that issue dividend stocks have their own rules that can affect whether or ...

    The Differences Between a Stop-Loss Order & a Limit Order

    When an investor confuses a stop-loss order and a limit order, there are serious financial consequences. Although both of these order types are designed to trigger an action with owned stock, those actions are significantly different. Most investors use stop-loss and limit ...

    Reason to Treat Preferred Stock As Debt Rather Than Equity

    The main reason to treat preferred stock as debt rather than equity is that it acts more like a bond than a stock, and investors buy it for current income, not capital appreciation. Like common stock, preferred stock represents an equity stake in a company, but its many features ...

    The Difference Between Overbought and Oversold

    “Overbought” and “oversold” describe short-term stock price extremes that suggest the stock's price has gone too far in a particular direction. Overbought implies prices may have gone up too much; oversold implies prices may have gone down too much.

    Limitations of a Trend Line

    A trend line is a staple of technical analysis. It indicates a stock’s current trend -- up, down or sideways -- that traders use to make timely buy and sell decisions. A trend line's predictive value may be limited, however, as it is often more useful in describing past ...

    Difference Between a Stop-Loss Order and a Trailing Stop Order

    A stop-loss order helps you limit your losses or protect your profits. The difference between a regular and trailing stop-loss order is that the regular stop-loss must be changed manually, while a trailing stop-loss is adjusted automatically based on the amount or percentage you ...

    Importance of Mutual Funds

    Mutual funds pool money from individuals and organizations to invest in stocks, bonds, and other assets in different industry sectors and regions of the world. You can buy whole or fractional fund units directly from fund companies or through your broker. The price of each ...

    Can Stock Dividend Checks Be Reinvested?

    As you see the stock dividends build up in your brokerage account, you may start looking for a way to get those dividends reinvested into more shares of stock. If the reinvestment can be done without commissions, that would be even better. The good news is that there are ways to ...

    How to Find the Market Value for CUSIP Bonds

    Bonds and other securities traded in the United States each have a unique CUSIP number. CUSIP stands for Committee on Uniform Securities Identification Procedures. These numbers help financial institutions identify the correct security when handling trades. If you know a ...

    How to Find a List of Registered Investment Advisors

    It is wise to seek professional guidance if you are an inexperienced investor or you simply want help with your investments. An investment adviser provides you with an expert opinion on your overall investment strategy and financial situation. All investment advisers must ...

    How to Make Intelligent Decisions About Where to Invest

    Three main elements of retirement include Social Security benefits, pensions and savings and investments. Investing your money wisely helps ensure a comfortable retirement. Knowing where to invest -- and how much -- can be a daunting task for many.

    Rising Interest Rates and Investing in Bonds

    Although it may seem to go against common sense, bond investors do not like to see interest rates going up because of the inverse nature of bond prices and rates. Higher interest rates produce lower bond prices. The implementation of some bond portfolio strategies can minimize ...

    How Are Bond Ratings Determined?

    Bond ratings may look like alphabet soup, but there's plenty of method and important information contained in them. A bond is a promise by the issuer to the bondholder, not only to make timely interest payments, but to return that investor's principal when the bond matures. Bond ...

    Does the Value of a Stock Go Up if the Company Is Doing Well?

    Theories abound about ways to predict how the stock market will perform, from the victor of the Super Bowl to butter production in Bangladesh. When it comes to prognosticating the direction of stocks, the truth is, nobody has a crystal ball. In most cases if a company performs ...

    Long-Term Investment Taxes

    For tax purposes, an investment can be real estate, stocks, bonds and even personal property such as furniture and jewelry. As long as you own the asset, taxes are generally not an issue. When you sell an investment, however, your profit or loss has tax consequences. Long-term ...

    Can I Buy More Stocks From Cash Purchasing Power?

    If the overview screen of your online brokerage account lists an available purchasing power figure, you can use that money to buy more stocks. In a brokerage margin account, the availability of margin loans allows you to buy more stock than you have cash or equity. Using the ...

    What Does a Dow Jones Point Drop Mean?

    The Dow Jones Industrial Average, commonly known as the Dow Jones index or just the Dow, tracks 30 large U.S. companies across all industries, except for transportation and utilities. The Dow is a price-weighted index, which means that the weight of each stock in the index is ...

    Can Employees Who Buy Stocks Be Accused of Insider Trading?

    Any individual who possesses information about a publicly-traded company that’s unavailable to outside investors, and who uses that information to gain an advantage when buying or selling that company’s stock, has committed the illegal act of insider trading. This ...

    Bond Alternatives

    Bonds generally have a place in an investor's asset allocation or investment plan. Nonetheless, investors might seek to diversify away from bonds. Luckily, there are several alternatives to consider. While bonds tend to provide some stability to an investment portfolio, ...

    How to Cash Out Dividends After an Ex-Dividend Date

    To receive dividends from stock shares you must own them before the ex-dividend date. On the ex-dividend day, you become entitled to receive the dividend, even if you sell your shares. If you own the stock through a brokerage account, the broker will most likely credit the ...

    What's the Point of Stocks Closing if They Have After Hours?

    It is both practice and tradition: stock markets close at 4 p.m. every weekday. Traders and brokers respected the clock until trading after hours became possible because of electronic communications networks. ECNs enable institutional players and individuals to expand their ...

    Common Trust Fund Vs. Mutual Fund

    Thrift institutions, trust companies, and banks that are federally or state chartered manage common trust funds. Common trust funds represent the pooled assets of many small trusts, and individual beneficiaries receive returns proportionate to their share of the principal. ...

    What Is the Difference Between Interest Rate & Yield on Series EE Bonds?

    The way the U.S. Treasury reports interest earnings on Series EE savings bonds is different than the reported returns from most interest-bearing investments. All Series EE bonds issued since May 2005 earn a fixed rate of interest for the life of the bond. These newer bonds ...

    Market Capitalization & the P/E Ratio

    Market capitalization and price-to-earnings ratio describe the size and relative valuation of stocks, respectively. These measures are important because they can affect portfolio returns. Some investors invest only in small but growing companies, while others favor stocks of ...

    What Factors Make Bonds Move?

    Supply and demand are the basic determinants of prices for bonds and other financial assets. Bond prices rise when demand outpaces supply and fall when there is insufficient demand. A bond's yield, which is the ratio of annual interest payments to market price, rises when its ...

    The Importance of Price Changes From the Previous Day in the Stock Market

    A trader differs from an investor in the stock market based on the time frame for profits. While investors look to the long-term, traders tend to take profits in the short-term. This means a trader may hold a stock for as little time as a day or as much as a year, but seldom ...

    How Much Money Do You Need to Invest in Individual Bonds?

    Governments and corporations are the primary bond issuers. Bonds usually trade at a discount or premium to their respective principal or par values, which range from a low of $25 for savings bonds to $1,000 and higher for municipal and other types of bonds. Investors receive ...

    How Is a Mutual Fund Value Determined?

    The value of your mutual fund account is the current share price multiplied by the number of shares you own. Mutual funds use the term "net asset value," or NAV, to indicate the share price. A fund follows regulations from the federal Securities and Exchange Commission ...

    Net Asset Value vs. Price

    With the different types of investment funds, there may be a distinction between the net asset value and the share price. The difference between the share value types could have a significant impact on your investment returns. At a minimum, you should understand what is going on ...

    The Difference Between Restricted Stock and Stock

    At first glance, there may not appear to be much of a difference between restricted stock and common stock. When issued to the stockholder, they perform exactly alike, both having voting power and a share in the company as a whole. The difference lies in when the stockholder ...

    The Disadvantages of Investing in Townhouses

    To many investors, townhouses represent attractive investment options because of their low cost of entry, numerous community amenities, and nearly maintenance-free environment. Because land typically comes along with a townhouse purchase, many investors also expect high ...

    What Is Considered a Good EPS in the Stock Market?

    Good earnings per share, or EPS, in the stock market depends largely on expectations. Both Wall Street analysts and corporate executives generally identify a number or range expected for profits, or earnings. Investors generally cheer a stock that meets or exceeds those ...

    When Does an Option Expire?

    The two types of options, calls and puts, give holders the right to buy or sell the underlying securities at certain prices, known as strike prices, before specified expiration dates. These contracts can rapidly lose value the closer they get to expiration. Therefore, you should ...

    Can I Invest in a 529 Before My Children Are Born?

    You can not invest directly in a 529 plan for unborn children. The two types of 529 plans are college savings plans, which are investment accounts for education expenses, and prepaid tuition plans, which allow you to buy credits at participating schools for future college costs. ...

    Types of Tax-Exempt Bonds

    Tax-exempt bonds are typically issued by state and local governments to raise funds for the public good. Money generated by these bonds, also called municipal bonds, is used for expenses such as building schools, funding infrastructure projects and paying for general government ...

    How to Compute the Margin of Safety

    Finding a way to select under-priced stocks has been a goal for countless investors. Benjamin Graham, considered the father of value investing, developed a concept known as the margin of safety to guide stock purchases. Graham’s strategy is to invest in stocks based on the ...

    The Disadvantages of Online Investing

    Web-based stock brokerage accounts make it easy for anyone to buy and sell stocks, mutual funds and other types of investments. Online investing can be a convenient option for experienced investors, but it also presents certain disadvantages that may be especially harmful to new ...

    How to Define "Return on Equity" in Simple Words

    Return on equity, or ROE, is a financial ratio that measures how effective a company is at generating income compared to the funding shareholders have contributed. Defining return on equity in simple terms can be accomplished through examples and by breaking down the ratio into ...

    Skills Needed for Private Equity

    Private equity is capital invested in private non-public companies that offer superior long-term return on investment. Investors include high-net-worth individuals, pension funds, charitable endowments and sovereign wealth funds. Private equity funds are often structured as ...

    Dividend Income vs. Ordinary Income

    Depending on the type of income you earn, you might pay different tax rates on your earnings. To know what you will pay, you'll need to know whether your income is considered ordinary income or capital gains income. Dividend income can be either, depending on the situation.

    What Happens to Delisted Shares?

    When a company's shares get "delisted," they disappear from the exchange on which they had been trading. Sometimes they disappear completely, but other times they don't. Depending on the reason for the delisting, the shares may continue to trade -- although buying ...

    What Is a Prospectus for Bonds?

    Bond investors regularly find publications from investment firms in their mailboxes. These publications detail bond performance and are called prospectuses. As a bond owner, expect to receive one for each of your investments at regular intervals for as long as you hold the ...

    How to Calculate Basis When Exercising a Call Option

    In investing, your cost basis is your initial input of money, and comparing this number to your sell price tells you whether or not you have a gain or a loss. If you trade using call options -- contracts that give you the right to buy an asset at a particular price -- the cost ...

    Difference Between Market Value and Intrinsic Value

    Market value is the value of a financial asset that is readily available from market quotations. Financial assets include stocks, bonds and real estate properties. In their book "Security Analysis," Columbia University professors Benjamin Graham and David Dodd define ...

    What Are the Dangers of Selling Stocks Quickly?

    Stocks tend to provide a steady return on investment when you invest long-term, but some investors choose to buy and sells stocks frequently in an attempt to make quick profits. The practice of buying and selling stocks on the same day is called "day trading." Holding ...

    The Relationship Between Futures Day Trading and Margin

    One reason the futures market appeals to traders is the amount of available leverage that allows for profits from relatively small price moves in the underlying instrument. The typical margin deposit is 5 to 15 percent of a future contract's value, with the margin requirement ...

    In What Ways Is Preferred Stock Like Long-Term Debt?

    Preferred stock has characteristics of both common stock and the long-term bonds corporations sell to borrow money. For this reason, preferred stock is often referred to as a hybrid of common stock and bonds. This dual nature makes preferred stock an alternative investment ...

    Advantages & Disadvantages of a Certificate of Deposit

    A certificate of deposit is a time deposit in which you commit to keeping a specific amount of money at a financial institution for a few months to a year or more. In return, the bank or credit union pays you interest above what you would get from a savings or money market ...

    What Increases Stockholder Equity?

    When you invest in stock, an important figure to be familiar with is stockholders' equity in the company. This is the amount of money that can potentially be paid out to investors. But you should also understand the two ways that stockholders' equity can increase. One method ...

    Annual Investments Needed to Become a Millionaire in 40 Years

    Setting up a regular investment plan to reach $1 million in 40 years is an achievable goal. You need some help along the way with some positive investment returns, and if the markets help, you may end up with much more than $1 million. Use proven investment strategies and ...

    What Is the Significance of a Closing Price on a Stock?

    At the opening bell of the stock market, investors around the world take notice of the opening price of the market and individual stocks. Where the stock closes for the day determines how well or poorly a stock performed, which is a big deal for not only investors but also ...

    What Day of the Week Is Most Volatile in the Stock Market?

    Theoretically, the stock market and individual stocks should adjust immediately after updated information reaches both the market and its investors. However, the day of the week also influences volatility for additional reasons. The most volatile day of the week is Monday in the ...

    Stock Symbol Tips

    Learning to interpret stock ticker symbols can be a valuable skill for an investor who wants to carefully track a portfolio or potential investments. Any publicly-traded company is represented by a unique ticker symbol, usually made up of one to five letters. With business ...

    Types of Stocks and Their Characteristics

    Stock exchanges are home to thousands of stocks of companies in different sectors operating around the world. You should have little difficulty constructing a diversified stock portfolio to suit your financial objectives and risk tolerance. Some stocks offer steady capital ...

    What Is It When a Stock Goes Ex-Dividend?

    When you purchase a stock you may be entitled to a dividend payment from the company -- but you may not. It all depends on whether or not the stock has gone ex-dividend. Familiarize yourself with the ex-dividend date and its implications for buying and selling shares. ...

    Can a CD at a Bank Lose Money From an Early Withdrawal?

    A certificate of deposit guarantees specific earnings, but this is a two-way agreement. It usually requires you to deposit and keep a given amount of money in the account for a specific period. If you withdraw your money before the account matures, you typically have to pay an ...

    What Are the Differences between Debt & Equity Investments?

    While both debt and equity investments can deliver good returns, they have differences with which you should be aware. Debt investments, such as bonds and mortgages, specify fixed payments, including interest, to the investor. Equity investments, such as stock, are securities ...

    What Is the Biggest Difference Between an Option & a Futures Contract?

    Both options and futures trading provide the opportunity to place leveraged bets on the movement of the stock market or commodity prices. The use of leverage lets traders multiply the gains of the price movements of the underlying instrument. In spite of these similarities, ...

    A Company That Sells Shares in the Stock Market Is Involved in Which Type of Financing?

    Companies need funding for many reasons, and often firms raise money by selling shares in the stock market. These companies are engaged in equity financing. Firms issue stock with the help of investment banks. Investors buy shares for potential economic gain. Alternatively, ...

    The Concepts of Return on Investment and Risk

    Return on investment is the profit expressed as a percentage of the initial investment. Profit includes income and capital gains. Risk is the possibility that your investment will lose money. With the exception of U.S. Treasury bonds, which are considered risk-free assets, all ...

    Bond Rates of Return

    Bonds are debt securities issued by institutions such as governments and corporations to borrow money. A bond’s yield, or rate of return, can be measured using several different methods. The method you choose depends on what you need to know about a particular bond.

    How to Start a College Savings Account for a Child Who Isn't Born

    Completing a college degree isn't cheap and tuition rates are likely to continue increasing to keep up with inflation. If you're already saving for retirement, starting a college savings plan for your child may be the next item on your financial to-do list. College savings ...

    What Happens to Bonds When the FRB Lowers Short-Term Interest Rates?

    The Federal Reserve Board sets monetary policy by adjusting the benchmark short-term interest rate, known as the federal funds rate. The "Fed" raises rates to control inflation and lowers rates to stimulate economic growth. Bond yields fall and prices rise when the Fed ...

    What Are Year-to-Date Earnings?

    Year-to-date is a term that often comes up when firms release mid-year earnings figures. Year-to-financial numbers, which include not only earnings but also sales, expenses and other key parameters, allow investors and management to determine if the firm is on track to ...

    Rated Debt Vs. Unrated Debt

    Just like stocks, debt instruments, specifically bonds, can be traded in public exchanges. Since corporate bonds can be a great deal more complicated than stocks, they sometimes come with ratings to help investors understand the potential risks and rewards. Before you buy bonds ...

    Collateralized Debt Obligation

    Collateralized debt obligations, commonly known as CDOs, are bonds backed up by a pool of loans. The word collateral means that the loans are backed up by a physical asset. CDOs benefit borrowers as well as lenders, and can provide a profitable alternative for investors.

    Explain the Concept of Interest Rate Parity

    The interest rate parity theory is a powerful idea with real implications. This theory argues that the difference between the risk free interest rates offered for different kinds of currencies will determine the rate at which these currencies can be converted to each other in a ...

    Tax-free Municipal Bonds and Rate of Return

    Municipal bonds, informally called "munis," are debt securities issued by state and local governments to borrow money. The money raised by selling municipal bonds may be used to build roads, hospitals, schools and similar projects. Most municipal bonds offer tax breaks ...

    How to Study the Stock Market

    You don’t need a PhD in economics to learn how the stock market works, but the more education you seek as you invest, the greater your chances of coming out ahead. Sure, there are plenty of classes and workshops available. You can even sign up for tutorials online that are ...

    Advantages of the Bond Market

    Consumer borrowing includes credit cards, mortgages, auto loans and personal loans. In every case, the consumer is the borrower and the financial institution is the creditor. In the bond market, the relationship is the opposite. The federal government, municipalities and ...

    Why Would a Company's Stock Price Fall If It Reports Deficiencies in Its Internal Controls?

    "Deficiencies in internal controls" is a catch-all statement used by auditors to indicate a lack of faith in the company's operations. It could signal bad accounting policies, as well as deception or fraud at a company. This uncertainty usually causes a company's stock ...

    Difference Between a Hedge Fund & Venture Capital

    Hedge funds invest across many asset classes, or investment categories, while venture capitalists generally provide equity and debt financing to new businesses. Hedge funds are portfolios that are managed by professionals who attempt to make money regardless of market ...

    How Does a Stock Market Crash Occur?

    A stock market "crashes" when there is a sharp, sudden drop in prices throughout an entire stock index such as the Dow Jones Industrial Average or the Standard & Poore 500. Markets are generally thought to have crashed when prices drop by 10 percent or more in a ...

    The Advantages of Holding Preferred Shares

    Preferred shares of stock have some characteristics of common stock and of bonds. Sometimes referred to as a hybrid security, preferred shares may be a good option for the investor who wants income but doesn’t want to rely entirely on bonds. Although preferred shares have ...

    What Is a Treasury Derivative?

    In the most basic terms, a derivative financial product has a value based on another financial product. A Treasury derivative would use some form of U.S. Treasury security — bills, notes or bonds — as the base or underlying asset. Derivatives allow financial firms ...

    What Causes Changes in Stockholder Equity?

    When you own shares in a publicly held corporation, the equity figures provided in its financial statements are the company's accounting of what currently "belongs" to you and your fellow shareholders. Equity has three parts: contributed capital, retained earnings and ...

    How Can I Buy a Stock in the Dow Jones Industrial?

    The Dow Jones Industrial Average is the oldest and most widely followed U.S. stock market index. A stock index tracks the price changes of a selected group of stocks -- in this case 30 stocks chosen by the Dow Jones Company. Although you cannot buy directly into the index, there ...

    How Does a Stock Dividend Affect a Stockholder's Equity?

    Dividends can provide you with an income from your investments while you are holding stocks. But a dividend is more than just a source of income for investors. Dividends have an effect on the firm's finances, including the amount of stockholders' equity in the company.

    Meaning of Stocks Shorted

    Shorting involves selling stocks that you have borrowed from your broker. You have to buy back these stocks at some point to return them to your broker, ideally at a lower price point. A long position in a stock implies ownership, but a short position does not. Short selling is ...

    What Are the Key Features of a Bond That Determine the Yield to Maturity?

    Investors view the yield-to-maturity as the most accurate depiction of the return potential of a bond. The other yield calculations, coupon rate and current yield, do not take into account all of the factors included in the yield-to-maturity calculation. All of the numbers that ...

    Short Term Bond Vs. Long-Term Bond Rates

    Bonds are debt securities issued by corporations, municipalities or other government entities. When you buy a bond, you are loaning money to the issuer for a set period in exchange for the promise of a return of the bond's face value plus interest. You can make money on bonds ...

    Can a Person Really Make Money Trading Stocks?

    In 2002, 67 percent of Americans owned stocks. Recessions and financial jitters have eroded investor confidence to the point that as of April 2011, only 54 percent of Americans owned stocks, according to Gallup. Investments in stock involve the risk of loss. If the market price ...

    How Is the NASDAQ Calculated?

    Launched in 1971 as the National Association of Securities Dealers Automated Quotation system, Nasdaq has evolved into a global electronic stock exchange for thousands of domestic and international stocks. It is home to some of the leading technology companies as well as startup ...

    The Disadvantages of Online Trading

    Online trading is fast and inexpensive. You can place trades from the convenience of your home without ever having to speak to a live agent. However, the speed and efficiency of online trading platforms depend entirely on the supporting technology infrastructure, which could ...

    What Is a Forward Stock Split?

    Each corporation has a certain number of outstanding shares among owners. The number of shares you own might change as a result of business decisions that companies pursue. One such decision is a forward stock split.

    What Does .PK Mean After a Stock Symbol?

    A ".PK" after a stock ticker means it's listed by the OTC Markets Group Inc. This company lists stocks, usually over-the-counter securities, from market-makers and brokers who use the group to list selling prices as well ask and bid prices. These stocks are usually ...

    Do Large Cap Stocks Outperform Small Caps If Dividends Are Reinvested?

    Small cap stocks traditionally outpace large cap stocks over the long haul. When dividends from large cap stocks are reinvested, however, the gap becomes smaller or even surpassed -- it really depends on the company itself. Large cap stocks in specific industries are more likely ...

    Can You Buy & Sell a Stock the Same Day?

    Conservative investors typically buy stocks and hold onto them for a few years or longer, to take advantage of the general upward trend that the stock market tends to follow over long periods of time. However, the stock market is fluid, allowing investors to buy and sell a stock ...

    Does a Stock Split Affect Stockholders' Equity?

    Every so often a company announces a stock split. This means that the company increases the number of its outstanding shares held by its existing shareholders. Stock splits don't affect shareholder's equity. The best analogy of a stock split is taking a pie that is already cut ...

    Has the NASDAQ Ever Closed?

    Few institutions are as rigidly controlled as the world’s stock markets. Opening and closing hours are sacrosanct -- as evidenced by ceremonious bell ringing each morning on the New York Stock Exchange to signal the start of the trading day. While no vintage bell rings ...

    What Is Active Portfolio Management?

    To understand active stock portfolio management, it helps to compare this investment method with another style known as passive investing. In an active portfolio, a fund manager buys and sells financial securities in response to changing market conditions. A passive investment ...

    Can You Make Money When a Stock Price Is Stable?

    When you buy stock shares, you expect them to increase in value. You understand there is a possibility the stock may go down, but you are confident you have made a good investment choice. During a period when the stock isn't moving up or down, other strategies are necessary to ...

    What Are Pre-Market Futures?

    Pre-market futures trade before the regular investment markets open. Different market exchanges specialize in the trade of specific types of futures. For example, the Commodity Exchange in New York specializes in pre-market futures of copper, gold, and silver. Other well-known ...

    What Is the Dilution of Equity?

    When you buy a stock, you are purchasing a portion of a company. For example, owning a share in a firm that has 100 shares entitles you to 1 percent of all future profits. However, your percentage ownership in the firm can go up or down even if the number of stocks you hold ...

    What Are the Two Main Sources of Stockholders' Equity?

    Stockholders' equity, the value of a firm's assets minus the company's total liabilities, has two key sources. The initial building block of stockholders' equity is paid-in capital. The other main source of stockholders' equity is accumulated retained earnings. Investors should ...

    What Is the Opposite of a Stock Split?

    A stock split is a decision by a company to break single stocks into multiple stocks. A company does this by giving each shareholder multiple shares for each single share he owns. The opposite of a stock split is a reverse stock split. A reverse stock split is a decision by a ...

    What Is Pre-Tax Gain?

    Because individuals pay varying tax rates, investors find it useful to refer to pre-tax gains on stocks. This means you measure how much the stock actually made from the time you purchased it until the time you sold it, without any consideration of what taxes you would pay on ...

    What Is Post-IPO?

    "Post-IPO" refers to the period after a company's initial public offering of stock, which is its debut in the equity financial markets. Typically, during these months the banks that were responsible for underwriting an IPO, or bringing that stock to the market, and ...

    Definition of Cyclical Investing

    Cyclical investing is a strategy that puts money into sectors of the economy according to the stage of the economic growth cycle. During recessions or times of slow growth, more conservative investments are appropriate, while the reverse is true in time of fast economic growth. ...

    What Type of Market Is the NASDAQ?

    The NASDAQ is the largest fully electronic stock market in the United States, with average daily volume running about 2 billion shares a day. Unlike other major stock markets such as the New York Stock Exchange and the American Stock Exchange, the NASDAQ has no physical trading ...

    Do Reinvested Earnings Add to Stock Basis?

    Buying stocks that pay regular dividends and reinvesting those dividends is a good way to build equity, and it does add to the cost basis of your stock. Correctly tracking the basis of your stock is important because you don’t pay taxes on the basis when you eventually ...

    When Are Dow Futures Posted Over the Weekend?

    Unlike the stock market, which is open from 9:30 a.m. to 4 p.m eastern time on weekdays, electronic futures trading runs almost 24 hours a day, five days a week. As a result, the trading of stock index futures such as the Dow futures contracts provide overnight and early ...

    Equity Vs. Fixed Income Investments

    Equity and fixed income investments each reflect very different risk and return profiles. Investors who buy equities are taking on more risk because the stock market, which is where equities are traded, can be extremely volatile. Bonds, which are fixed income securities, provide ...

    Indicators That Stock Prices Will Increase

    The sooner an investor recognizes the likelihood for gains in a stock, the greater his chances are to profit from that equity security. While the financial markets can be unpredictable, investors can draw certain conclusions based on sentiment surrounding a particular company or ...

    Who Is the Loser When an IPO Is Undervalued?

    When a company's initial public offering, or IPO, is undervalued, that company is selling shares of stock for less than their market price. It's a great deal for investors, who get a bargain price and the ability to turn a quick profit. But it can be a catastrophe for the ...

    What Percentage of My Income Should I Save or Invest?

    Each person starts saving at a different age and makes a different amount in salary, so setting aside money for retirement is an individual decision. However, you should set a target percentage or a dollar amount you will set aside each month for your retirement years. You ...

    What Is the Difference Between Extrinsic & Intrinsic Value of an Option?

    The features and functions of stock market options allow for some of the most creative trading strategies in any of the various trading markets. One reason for the ability of options traders to strategize for any conceivable market condition is how options are priced. The ...

    The Advantages of Ratio Analysis for Stock Picking

    Making money in the stock market is challenging. Ratio analysis can be a great tool to utilize when evaluating companies. Ratios allow investors to compare a firm's performance against industry averages. Sometimes this can uncover bargains. However, evidence suggests investors' ...

    What Is the Tax Rate on Unqualified Options?

    Employers like to grant stock options to retain and encourage valued employees. Unqualified options, also known as nonqualified or nonstatutory stock options, do not offer special tax advantages, but don’t let that bother you. If you're awarded unqualified stock options ...

    How to Make Money From a Stock That Does Not Pay a Dividend

    Not all stocks pay dividends, which is fine as long as the stock appreciates in value. Unfortunately, this is not always the case. Holding onto stocks over the long-term and hoping for the best keeps many investors up all night. You can be a long-term investor and realize a gain ...

    What Causes a Decrease in Owner's Equity?

    Owning equity in a company means that you own all or part of it. The owner’s equity account is listed on the balance sheet for accounting purposes. There are a few reasons for a decrease in owner’s equity.

    Bond Vs. Equity Returns

    Bond and equity returns consist of capital gains and cash distributions. Bond returns consist mainly of periodic interest payments. Equity returns consist mainly of capital gains when you sell, although some companies pay cash dividends as well. The total return of your ...

    Keys to Analyzing Stocks

    Evaluating a stock is a challenging process consisting of multilevel analysis. Companies operate in the broader economy and within particular industries that can impact performance. Therefore, market analysis is fundamental to researching a company. In addition, the firm's past ...

    What Are Two Financial Statements That Are Needed When Dealing With Stocks?

    More than half of all Americans had an investment in the stock market, either through personal stock ownership or through a retirement plan at work, as of April 2011, according to a poll taken by Gallup, Inc. Stocks represent ownership in a company and are bought and sold ...

    Can I Buy Federal Government Bonds?

    U.S. government bonds are issued by the Department of the Treasury and as a result, the different federal debt issues are known as Treasury securities. Individual investors can buy Treasury bonds almost as easily as large financial firms. The wide range of available Treasury ...

    What Does the Term Global Equity Mean?

    The large number of available mutual funds and exchange traded funds -- ETFs -- leads to the division of funds into different categories based on the types of investments a particular fund owns. The two broad categories are stock and bond funds. The term "global ...

    What Is a Hedging Transaction?

    In finance, a hedging transaction is used to alleviate the risk of loss associated with an adverse move in the price of a financial asset. When available, a perfect hedge can fully eliminate the risk of loss. In other cases, the investor can only partially eliminate the risk. ...

    How to Find the Value of US Savings Bonds

    The United States Treasury Direct gives consumers a safe and effective way to invest with the purchase of savings bonds. The Treasury Direct no longer issues paper savings bonds, instituting a changeover to digital bonds in 2012. Tracking the value of U.S. savings bonds can be ...

    Probability of Stock Trade Using Standard Deviation

    Some professional stock traders use quantitative analysis to analyze the market and predict the future value of securities. They begin by assuming that the path of a stock will be a "random walk" and that the values will be distributed along a bell curve or a normal ...

    What Is the Difference Between Income Dividend & Capital Gains Distributions?

    Mutual funds sell shares and use the incoming money to buy various securities, primarily stocks, bonds and money market tools, depending on the strategy of the fund. So, you and other fund shareholders effectively own a piece of each of the fund's underlying securities. Because ...

    What to Look for When Buying a Stock

    There is plenty of data to sort through when it comes to stock research. Everyone's style when buying stocks is different, and you need to find the style that best suits your investing needs. From the type of stock to the research methodology used, there are a number of choices ...

    Tenets of Financial Investing

    While investing in the stock market and other financial vehicles can be lucrative, it also carries a wide range of risks. You’ll find a plethora of different investment styles and philosophies, but nothing even close to a universally accepted method for investing. Being ...

    The Average Return on the Dow Jones During Its Lifetime

    The Dow Jones Industrial Average is a market index of 30 blue-chip U.S. companies covering most sectors of the economy, except transportation and utilities. Although the Dow does not represent all U.S. companies, it accurately tracks the performance of broader market averages ...

    Mutual Funds That Distribute Capital Gains to Their Holders

    A mutual fund does not decide whether or not it should make capital gains distributions. The rules and laws covering mutual fund management dictate the capital gains requirements, and every mutual fund has the potential to pay capital gains. The amount of any capital gains a ...

    Bond Sensitivity to Interest Rates

    Since the typical investment bond pays a fixed rate of interest each year, the mechanism to adjust for changing rates is to change the market price of a bond. How much a bond's price could change depends on several factors. The concept of duration gives an estimate of a bond's ...

    How to Calculate APR Earned on an Investment

    The annual percentage rate measures the amount of interest an investment earns over the course of a year. When interest is compounded, investments grow faster because the new interest earned each period includes the principal investment, plus the previous periods' interest. This ...

    What Impact Do Stock Splits Have on a Total Stockholder's Equity?

    Investors should be concerned about stockholders' equity in any company in which they invest in because equity affects how much a company can issue in dividends. Stock splits affect stockholders' equity, given that they increase your number of shares in a company. Savvy ...

    Types of Trading: Swing Trading & Day Trading

    A day trader is an investor who seeks to profit from the daily price movements of stocks, indexes, bonds, currencies or commodities. Being a trader is not for the faint at heart. There is unlimited profit to be made; however, an adverse price movement can wipe out your trading ...

    Factors Affecting the Direction of Stock Prices

    Corporate profits are among the biggest drivers of stock prices. Higher profits suggest that a company is growing, which tends to have a positive impact on the way its stock is valued. Profitability is not the only factor, however. The equity markets, where stocks trade, are ...

    Fund Investment Themes

    Fund investment themes are limited only by the creativity of a fund manager. Investment funds, such as mutual funds, might be dedicated to themes ranging anywhere from the size of the financial securities in the portfolio to the regions in which investment companies are ...

    Can an IRA Own S Corp Stock?

    Most people know that they can use the money in their self-directed individual retirement arrangement to invest in stocks, bonds and mutual funds. What many people don't realize is that they can take money from their IRA to invest in real estate and even a start-up company. You ...

    Stock Market Volatility and Learning

    The stock market fluctuates on a daily basis, and with each change in price there are stock winners and losers. Too much volatility means that there is uncertainty in the market -- not good for investors. Professional investors attempt to insulate their portfolios from ...

    Common Stock Cash Dividend and EPS

    For stocks that pay regular cash dividends, the earnings per share is the major factor concerning the amount and sustainability of the dividend payments. Investors looking for stock dividends use the relationship between dividends and EPS to differentiate between various ...

    Safety of GNMA Funds

    The Government National Mortgage Association, or GNMA, insures principal and interest payments on some bond funds. GNMA funds are regarded as low-risk securities compared with other types of bonds and debt instruments. Nevertheless, these funds expose investors to dangers that ...

    List of Stocks That Make Up the Dow 30

    The Dow Jones Industrial Average, also known as the Dow 30 or just the Dow, is a stock market index of 30 large U.S. companies encompassing all industrial sectors except transportation and utilities. These companies have diversified product lines and global operations. This ...

    What Is the Primary Reason for a Stock Split?

    The primary reason for a stock split is to bring the price down to a more reasonable level to attract more investors. Sometimes a stock becomes so expensive that it becomes unaffordable to investors, either literally or psychologically. A stock split does not alter the market ...

    What Happens to Stock Prices if the EPS Increases?

    Stock price changes are notoriously difficult to predict, but the earnings-per-share figure is a good starting point for gauging a company's prospects. If a firm's EPS rises and meets or even beats consensus forecasts, the firm's shares stand to rise. However, sophisticated ...

    What Happens to the Value of a Stock When It Divides Into Two or Three Companies?

    A company may decide to split up or "spin-off" part of itself to increase shareholder value or to separate out a portion of the business which does not fit in with the rest. After a spin-off, investors who owned shares of the original company end up with shares in the ...

    What Is a High Short Interest Ratio and the Potential for a Sizable Short Squeeze?

    Short selling is the sale of shares borrowed from a broker. The objective is to buy these shares back later at a lower price, thus making a profit. Short interest refers to the number of shorted shares for a particular stock. A short squeeze occurs when short sellers have to ...

    Long-Term Vs. Short-Term Treasury Bonds

    When it comes to a safe place to invest your money, it's hard to beat U.S. Treasury securities. Treasury bills, notes and bonds are backed by the full faith and credit of the United States government. Low minimum purchases and a large and liquid market add to the attractiveness ...

    Expensive Vs. Cheap Stocks

    Ideally, investors want to buy when stocks are at their lowest point and sell when prices have peaked. Identifying when stocks are expensive or cheap involves deciding whether shares are undervalued or overvalued. While there are some formulas that investors can use to measure a ...

    Is the Long Call Option the Same as the Short Put?

    Long calls are not the same as short puts. Buyers of option contracts are long, while sellers or writers of option contracts are short. Call and put options give you the right to buy or sell the underlying securities at specified prices, known as strike prices, before ...

    What Is Pushing a Bond Yield Higher?

    The current yield or return on investment of a bond is the annual interest payments divided by the market price, usually expressed as a percentage. Bond yields are inversely related to price, meaning that yields rise when prices fall, and yields fall when prices rise. The ...

    Dow Jones & The Dog Theory

    The "dogs of the Dow" investment strategy has been around for more than 20 years, and it still works. The strategy automatically selects the most undervalued stocks -- the dogs -- of the Dow Jones Industrial Average index, and it replaces them when different stocks in ...

    The Advantages of Holding Stocks

    Buying and holding stocks can be intimidating for new investors because stock prices fluctuate unexpectedly. You can make money in the stock market if the value of shares you hold goes up, but you can lose money if stock prices go down. Investors buy stocks despite the ...

    How Much Money Should I Save Before Investing?

    Balancing savings and investing is a difficult challenge. An individual should have insurance and savings to manage catastrophes and to pay for short-term goals. Saving between three to 12 months of net salary is a prudent level to strive for before embarking on investing in ...

    How Do Dividends on Stocks Work?

    The ultimate value of a stock for an investor is comprised of two components including the appreciation in value and the return of dividends. In fact, the formula for return on investment in a stock is the new price minus the initial price plus the dividends all divided by the ...

    Stock Delisting Process

    Stock delisting is the painful process of removing a company that is traded on the NYSE, NASDAQ or other exchange from public trading. Instead, the company is traded "over the counter" -- or OTC for short -- by specialist brokerage firms with less access to large ...

    What Is a Stock Ticker Symbol?

    If you’re a beginning investor, market reports may seem like a confusing alphabet stew: ROI, NASDAQ, DJIA, ETF and CMOs all serve as shorthand to refer to big ideas that investors use. Once you study up and learn the basic acronyms, you can turn your attention to a whole ...

    How Do Bonds Work at Maturity?

    A bond is an investment with a finite life. Unlike stocks, which are perpetual, a bond comes with a printed date, known as the maturity date, at which point it will expire. Holding a bond until it matures may reduce the risk of the investment. However, you can sell a bond at any ...

    How Late Can Stocks Be Sold Without Losing Dividends?

    When you own dividend stocks, you receive the dividends because you are the owner of record. However, when you decide to sell a dividend stock, you choose to cease being the owner of record. If you choose your sell date carefully, you can remain the owner of record for one last ...

    Bearer Bonds vs. Registered Bonds

    When you want a consistent, stated income and low risk for your investments, bonds are a solid option. As corporate or government debt investments, bonds give holders a priority over owners of equity investments (stocks) should the issuer have serious financial problems. ...

    What Is the Difference Between an Equity Limit Order and a Stop Order?

    Making money in the stock market is simple. You just buy low and sell high. At least the concept is simple; it's the implementation of that concept that is a bit more complex. One way to improve your ability to make money in the stock market is by using the most appropriate type ...

    The Wolfe Wave Technique

    If you slept through math, statistics or physics classes, you may not remember your teacher lecturing about a concept known as the bell curve. This stylized graph plots distribution models, earning the name because the shape looks like the profile of a bell. Bell curves were ...

    What Is a Short-Term Bond's Maturity Period?

    Bonds are signed documents that recognize a debt relationship in which corporations or governments are the debtors. They borrow money either to grow as a business or to pay for public works. To investors who buy the bonds, they promise to pay earnings at a predetermined rate at ...

    What Items Impact Stockholders' Equity?

    When you're looking at a balance sheet, the stockholder's equity, commonly referred to as the shareholder's equity section, reflects the difference between the company's assets and its liabilities: the company's net worth. Items that impact stockholder's equity include net ...

    Graduated Vesting

    Employees using 401k plans should take advantage of employee matching contributions but also be aware that ownership of these assets is not instantaneous. Graduated vesting schedules outline when an employee earns full ownership of matching funds. Individuals should read plan ...

    How to Improve a Sharpe Ratio in Trading

    William Sharpe's Sharpe ratio is a measure of risk-adjusted returns used to determine the best or worst returns given volatility within a market. The Sharpe ratio measures the ability of a portfolio to perform when volatility is treated as a negative aspect. The formula ...

    The Advantages of Open-ended Mutual Funds

    Managed investment companies, or mutual funds as they are commonly called, are classified as either closed-ended or open-ended funds. Both types of mutual funds manage a portfolio of securities; the main difference between the two is whether they continuously issue redeemable ...

    How Is the Market Price of Gold Determined?

    People have valued gold for its natural beauty and luster, as well as for its monetary value, for thousands of years. Pricing for this precious commodity is determined by supply and demand, and the market price for gold is officially fixed each day using a surprisingly simple ...

    The Term "DRIP" in Reference to the Stock Market

    The term "DRIP" in the stock market refers to a dividend reinvestment plan, a program that allows investors who own stock in a company to buy more stock by having the company reinvest their stock dividends into additional shares. As of 2012, more than 1,600 ...

    How to Design an Investment Portfolio

    Investment portfolios are the central element of financial plans. They transform hard-earned savings into sufficient funds to cover retirement expenses, college tuition for your children, medical emergencies and other needs. The design process includes setting specific ...

    What Influences the Price-to-Earnings Ratio?

    The price-to-earnings ratio, often called the PE ratio, is the ratio of market price per share to annual earnings per share for a company's stock. It measures the payback period for your investment in years. The PE ratio is not particularly relevant as a standalone number, but ...

    What Is the Maximum Loss That Could Occur for a Purchaser of a Call Option?

    Options are derivative products that allow investors to leverage a high level of stock without having to come up with a large amount of capital and actually purchase the stock itself. Purchasers of call options can take advantage of stock moves without an equal amount of risk, ...

    Technical vs. Fundamental Stock Trading

    The two main ways analysts derive stock prices and position trades are through technical analysis and fundamental analysis. Both methods have their merits. Technicians use technical analysis to indicate when to buy a stock, whereas fundamentalists use fundamental analysis to ...

    Stock Market Research Data

    Stock market research data includes a wide spectrum of statistics. Facts that impact the market range from company specific performance to economy wide indicators. Research can span historical, current and forecast time periods. Financial statements, press reports and business ...

    How to Make an Investment Portfolio More Conservative With Asset Allocation

    Investors who want to approach their investments in a conservative way need to limit their exposure to risky financial securities, investing more heavily in traditionally safe securities and avoiding some of the more volatile investments, where the promise of returns may be ...

    What if I Need My Money Back Before an Investment Bond Matures?

    One of the benefits of investing in securities -- such as stocks and bonds -- with active and organized markets is the ability to buy and sell as your financial goals change. Getting money out of an investment bond should not be a problem. Several different factors may affect ...

    Divorce & Investments

    If you're like many people, you've devoted your life to getting ahead. You've worked hard, you've saved, and you've invested. If you're married, the working, saving and investing might have been a dual effort – or maybe your spouse stayed home to raise the kids and left ...

    Are Financial Statements Helpful for Investing?

    If you want to know about the financial health of a company you want to invest in, check its financial statements. Reviewing a company's financials allows you to do your own analysis of the business. The three main reports -- the balance sheet, income statement and cash flow ...

    How to Sell Treasury EE Bonds

    U.S. Treasury EE bonds are government debt securities that mature after 30 years. Interest is paid quarterly at either a fixed or variable rate depending on when the bond was originally purchased. You must hold EE bonds for at least 12 months before you can redeem all or part of ...

    Debt-Equity Ratio and Total Debt Ratio

    Debt level ratios are useful first steps in understanding a firm's capital structure. Knowing how much of a company's assets are financed by debt is most revealing when compared to companies in the same industry. However, accounting policy can distort debt ratios; therefore, ...

    Prepaid Tuition vs. College Savings

    Prepaid tuition and college savings plans are the two types of 529 plans, plans with tax advantages created to help families save to pay for college. Each state in the United States sponsors at least one type of 529 plan, and some offer both options. Both plans require that an ...

    Differences Between a Stockbroker & a Financial Analyst

    Stockbrokers and financial analysts perform different functions in the investment marketplace, but both are important to investors. The essential difference between stockbrokers and financial analysts is that stockbrokers work with individual investors who invest their own ...

    Risk Factors Affecting Option Price

    There are a number of risk factors that affect the price of an option which include the underlying price (of a stock), the implied volatility, the current interest rates, as well as the time to maturity. Each of these risks is incorporated into the price of an option and can be ...

    How to Hedge Call Options

    Hedging a call option is the process of mitigating the risk associated with options trading. The concept requires a firm understanding of the risks embedded within an option, which can be evaluated using a Black Scholes pricing model. This mathematical model expresses the ...

    Tax Exempt vs. Taxable Yield

    For bond investors, one major decision involves whether to buy taxable or tax-exempt bonds. With other factors being essentially equal, the choice usually comes down to the better after-tax yield based on the taxable and tax-free options plus your marginal tax bracket. The ...

    The Advantages of Buying Individual Stocks

    There are many advantages to buying stocks individually, through either a full-service broker or a discount broker, versus investing in managed products such as mutual funds. Buying individual stocks provides independence and the ability to choose how to diversify, in addition ...

    Bond Fund vs. CD

    Bond funds and certificates of deposit, which are also known as CDs, offer two options for investors. Both investment vehicles are relatively low-risk investments that often are incorporated into diversified portfolios with other options, such as stocks, stock mutual funds, ...

    How to Cash in Your Margin Account

    A stock brokerage margin account lets you use a margin loan to pay for a portion of the cost of stock investments. You can cash in your margin account in a couple of ways. One way is to sell all of your investments and withdraw the entire account balance. Another is to use your ...

    Advantages & Disadvantages of Investing in a Savings Account or U.S. Savings Bond

    Everyone's life situation is different, so there is no one-size-fits-all rule when it comes to saving. One thing that is common to most people is the need to have some money in set aside in a safe, easily accessible place for emergencies. One of the big advantages of both ...

    Return on Investment Vs. Return on Equity

    You come across two figures when analyzing a company to see if it is financially healthy: return on investment and return on equity. You may find a strong ROE for a company but further investigation may reveal a poor ROI. Understanding the difference in the way these two figures ...

    How to Stop a Loss on a Long-Term Futures Contract

    Investing or trading of futures contracts allows you to take a leveraged position on the future value of the underlying assets. Futures trade against a wide range of commodity and financial product values, including energy, currencies, precious metals, interest rates and stock ...

    What Does Alpha Mean in Stocks?

    Stock market analysts use various methods to predict the performance of stocks. They develop models to analyze risk, compare a company's stock to risk-free investments, and calculate what the minimum return on the company stock should be to compensate investors for the assumed ...

    How Do Interest Rates in the Economy Affect the Price of a Corporate Bond?

    There is an inverse relationship between market interest rates and the prices of corporate bonds. When interest rates move up, bond prices go down. When interest rates fall, you are likely to see bond prices moving upward. For this reason, investors pay close attention to ...

    What Determines the Bond's Market Price?

    Investors who buy bonds are actually loaning money to the government or corporation that issued them. Each bond has a par value, which is the amount you are paid if you hold the bond until its maturity date. Until it matures, bond prices rise and fall in response to several ...

    How Does the Stock Price Change When a Dividend Is Paid?

    When a company pays a dividend, the company's value diminishes by the amount of the total payout. Investors reason that the company’s stock price should go down by the same amount as the dividend to reflect the company’s reduced value. In practice, this doesn’t ...

    Can the Dividend Ever Change on Preferred Stock?

    The dividend yields on preferred shares are often very attractive when compared to the common share dividends of the same company. As an added benefit, preferred shares get their name from the preference in the pecking order for dividend payments. However, the dividend rate for ...

    Formula for Calculating the APY on Bonds

    The annual percentage yield, or APY, takes into account the compounding effects of interest calculated from the annual percentage rate, or APR, which is the simple interest rate. APY is also called the effective interest rate, because it is the rate you effectively receive over ...

    How to Calculate Yield on a Bond Equivalent Basis

    The bond equivalent basis is the non-annual bond rate in annual terms. It can be implicitly calculated through the difference in bond prices. The bond equivalent basis yield then helps investors to adequately compare two different rates. Without a comparable rate, investors are ...

    Are Mutual Fund Returns Reported Net of Expenses?

    The discussion of mutual fund expenses tends to become a hot topic when the experts start discussing fund selection. Expenses of a fund are important. But because funds report results after taking expenses into account, you might not be able to verify the differences produced by ...

    Hedge Fund Vs. Stockbroker

    A hedge fund manager combines the assets of multiple investors and makes trading decisions on behalf of those investors. Stockbrokers are the link between individual investors and major stock exchanges and perform buy and sell transactions on behalf of investors. Each requires a ...

    How to Move Funds From One Child Coverdell to Another Child Coverdell

    Coverdell Savings Education Accounts are for annual contributions of up to $2,000 toward a child’s post-secondary education. As the account holder, you may make deposits until your beneficiary turns 18 years old. He then has until he is 30 to use the money for education if ...

    The Shareholders of the Common Stock of a Corporation

    Common stock shareholders are the most prevalent type of equity investors. They include both large and small investors. In exchange for purchasing shares, common stock investors become partial owners of a business. They can vote on important company happenings, attend yearly ...

    Do Stock Prices Drop During the Ex-Dividend Date?

    The share price of a stock does decline when the stock goes ex-dividend. This effect prevents traders from making a short-term profit from buying shares and holding them for one day to collect the dividend. Unless you know that a dividend payment is coming, the share price drop ...

    What Does It Mean When the Nasdaq Is Down?

    When the Nasdaq is said to be "down," that usually means that the Nasdaq Composite Index, an investment index comprised of some of the largest companies on the Nasdaq stock exchange, is losing value. This can be an indication that the broader financial markets are ...

    Can Annuities Lose Money?

    Like most investments, annuities carry a risk of loss. Annuities are insurance contracts generally intended to provide income during retirement. You can fund an annuity with a lump sum or contribute to it in varying amounts over time. Fixed annuities can be structured to ...

    What Is the Long-Term Average PE of the Dow Jones?

    The price-to-earnings ratio of the Dow Jones Industrial Average Index is the value of the index divided by total earnings of the stocks that make up the index. Even though the index began in 1896, the year 1929 is a commonly used reference point for any long-term average because ...

    How Should My Portfolio Be Allocated?

    Portfolio allocation is about reaching the right balance of investments. It is an ongoing process because it evolves around two important criteria: the time you plan to hold the investment, and your risk tolerance. Whether saving for a child’s college education or for ...

    What Are Callable Preferred Stocks?

    Investing is largely a battle between the fear of loss and the desire for gain. The desire for gain drives sales of equity stocks. They generate large gains over time but also represent a relatively high risk of losing your capital. The fear of loss sends investors into bonds ...

    Private Equity vs. Venture Capital vs. Investment Banking

    Private equity, venture capital and investment banking are all part of financial services, but each has a unique role. Private equity represents a group of private investors who use capital to purchase assets or entire businesses. Venture capital provides money to new businesses ...

    What Are the Dangers in a Stock Portfolio Overweighted in Utility Stocks?

    Utility companies are one of the most conservative stocks one can own. The companies are heavily regulated government entities that provide our water, electricity and heat. They produce slow, steady returns and are unlikely to have many highs or lows due to the predictable ...

    The Financial Terms 'Margin' and 'Earnings'

    Investors can analyze two key financial measures, earnings and margins, to judge a firm's prospects. Earnings and margin results can be powerful indicators of stock price movement, but only in a proper context. These metrics must be compared with either past results, firm ...

    What Is Portfolio Volatility?

    When an investment portfolio is experiencing volatility, it is exhibiting extreme price movements upward and downward. Generally, this choppy trading behavior occurs in a short period, which can worry investors. Volatility could be a result of investing too heavily in one type ...

    What Is a Stock Symbol or CUSIP Number?

    A stock symbol and a CUSIP number both identify securities traded on public markets. The stock symbol is alphabetic and dates to the 1800s, when the New York Stock Exchange began. It was used to send trade and price information by teletype, called a ticker, to brokers and ...

    Can Anyone Buy Futures Options?

    Options on futures are derivative products that trade on futures exchanges. The two most recognized exchanges within the United States are the Chicago Mercantile Exchange and the IntercontinentalExchange. These exchanges allow customers who trade through clearing members to ...

    How to Allocate Stocks and Bonds

    Stock and bond allocation is critical to achieving the investment return you desire. Stocks hold greater risk with an equally great chance of return; bonds hold low risk but have a low return. Depending on your financial situation and your investment goals, stock and bond ...

    Market Value vs. Market Capitalization

    Market value represents the stock price of a publicly traded company. It changes frequently based on the number of shares bought and sold by investors. Market capitalization is a broader illustration of a company's value, and it changes in part based on market value. Investors ...

    What Companies Make Up S&P Earnings?

    Since the 1950s, when it was first created, the S&P 500 index has been a vital gauge of stock market value. The index tracks the share prices of the largest companies on the public stock exchanges, including the New York Stock Exchange and NASDAQ. The earnings reported by ...

    Net Income's Effects on Stockholders' Equity

    Stockholders' equity, the claim investors have on the assets of a firm, can increase or decrease from changes in retained earnings. Each accounting period net income accumulates in the retained earnings account. Net income increases retained earnings, which can increase ...

    What Is a Bull-Put Spread?

    The next level up in options strategies after the straight purchase of puts or calls is to combine different contracts into a spread trade. The name of a spread often hints at how it would be used. A bull put spread uses put options to profit from a rising stock price.

    How Do Underwriters Set Stock Prices?

    Underwriters that set stock prices are usually large banks and brokerage houses hired for their financial expertise. Underwriters attempt to determine stock prices based on a company's worth. They also turn to economic conditions, as well as market demand for a particular type ...

    Intraday vs. Interday

    One way to distinguish between market trading strategies or types of traders is to separate them into intraday and interday. You may know of intraday trading by the commonly used term "day trading." Interday traders hold securities positions from at least one day to ...

    NAV vs. Stock Price

    A stock price reflects an actual sale, a trade of shares between a seller and buyer on some public securities market. A net asset value, or NAV, is the worth of one share in a mutual fund, which holds many securities. Investors use both figures to calculate the value of their ...

    Dividend Stocks Vs. Rental Properties

    Dividend stocks and rental properties can both be excellent vehicles for building wealth. Although both assets provide a steady stream of cash flow, one or the other may be more suitable for individual investors based on how active a role they want to play in managing their ...

    Pros & Cons of an Equity Index Annuity

    Equity indexed annuities are insurance contracts that are structured to provide you with a monthly income stream. Your income payments may rise as a result of a stock market upturn but the contract also includes protections that safeguard your cash during market downturns. ...

    Dividend Impact on Stock Values

    The sentiment about a company that is planning to pay a dividend is usually positive, which has a tendency to send stock values higher. This is especially true if the dividend price is being raised. When a company decides to lower its dividend payout, this tends to have a ...

    Are Taxes Deducted Before Calculating EPS?

    A company's earnings per share is calculated in a two-step process. First, investors subtract all expenses, including taxes, from a company's sales. The result, net income, is then divided by the average number of shares outstanding. Investors should also calculate the diluted ...

    Danger in Pink Sheets Trading

    Stock investing is tricky even for professional money managers. This is especially true of shares traded in the over-the-counter "pink sheet" markets. Although it may be tempting to bet on low-priced stocks or small, startup companies, these investments present ...

    How Is a Call Option Price Affected by an Increase in Expiration Time?

    Options are financial instruments that extend to investors the right to purchase or sell a stock at an agreed-upon price on or before a specific date. The option's time horizon plays a key role in determining its price.

    Registered Investment Advisors Vs. Broker Dealers

    While registered investment advisers and broker dealers both help clients set and reach investment goals, each profession has its own set of market protocols that professionals follow. RIAs tend to be quality minded and not motivated by individual product sales or the pieces of ...

    Pivot Point Trading Strategy

    The pivot point strategy is a forward-looking tool that uses recent prices to calculate support and resistance levels for the current trading period. The pivot point levels are an old school indicator, hailing from the floor trading days before everyone had a computer. The broad ...

    Why Do We Need a Stock Market?

    The stock market was born out of innovation in 1792, and investment professionals have continued to innovate ever since. Some turn to the markets as a career while others seek to discover fortunes to pass on to future generations. While the stock market has not always generated ...

    The Laws on Mutual Funds Fees

    Mutual fund investment companies pool and invest money from investors. For these services, mutual fund firms require the investors to pay different types of fees. The U.S. Securities and Exchange Commission, or SEC, regulates securities and investments, including mutual funds, ...

    The Average Weighted Value Vs. Duration in Mortgage-Backed Securities

    The terms average weighted value and duration would apply to a portfolio of mortgage-backed securities, or MBS. These metrics provide detail about the characteristics of an MBS portfolio, including how its overall value will react to changes in interest rates.

    What Is a Stock Buyback Program?

    Corporations with extra cash in the bank sometimes implement a stock buyback program, which allows the company to buy back shares of ownership from outside investors. These share repurchasing plans can have a dramatic effect on the company's operating strategy and brand image. ...

    What Is a Two-Tier Annuity?

    Annuities offer a guaranteed income in exchange for a one-time premium payment. A two-tier annuity has two different interest rates, depending on how long you hold the annuity. If you hold onto your annuity until its maturity date, you will be entitled to an interest rate that ...

    What Makes Up an Investment Portfolio?

    The good news is that you do not need to pay a professional broker to make up an investment portfolio -- you can do this yourself. Your goal is to compile a diversified portfolio. The key to accomplishing this is in determining which asset classes to include and their respective ...

    How to Construct a Bull Call Spread

    Option spread strategies use combinations of options contracts to achieve a particular profit potential vs. cost scenario. The name of a spread is often a description of what the strategy is designed to accomplish. A bull call spread uses call options to profit from the price ...

    What Is a Long-Term Maturity Treasury Note?

    The U.S. Treasury borrows money to fund government operations through the issue of U.S. Treasury securities. Government bonds carry a separate set of names including Treasury bills, notes and bonds. Confusion can arise since the names are sometimes used in a general sense and at ...

    How to Make a Domestic Stock Portfolio

    Creating a domestic stock portfolio is a traditional way to go about investing, as the markets have become highly international in nature. Nonetheless, it can be done and still accomplish some diversity so investors can earn expected returns and protect against severe loss. ...

    Can I Buy a Stock Option and Close It the Next Day?

    Options are financial instruments that extend to investors the right to purchase or sell a stock at an agreed-upon price on or before a specific date. Options can be purchased and sold during normal market hours through a broker on a number of regulated exchanges. An investor ...

    Do You Need Money to Buy the Shares When Executing a Call Option?

    Call options provide you with the right to buy shares of a certain stock, and when you exercise the option, you actually buy the shares. After you tell your broker to exercise an option, you have a few days to deposit the money into your brokerage account to pay for the shares. ...

    Is a Surrender Penalty on a Fixed Annuity on Principal or Interest?

    Liquidity, the ability to move funds in and out of investments easily and inexpensively, is an asset in financial planning. It means you can take advantage of new opportunities when they come along, or react quickly to minimize the damage if your current investments turn in the ...

    SEC Prospectus Rules

    The Securities Act of 1933 first required public companies to disclose particular information to investors. The Securities Exchange Act of 1934 created the U.S. Securities and Exchange Commission and authorized the agency to oversee and regulate the securities industry within ...

    How to Monitor Stocks With Respect to Options

    If you're investing in stocks, you might also want to keep track of stock options. An option is a contract to buy or sell a stock at a certain price and before a certain expiration date. You can use options to hedge your stock position, or speculate on a future move in the stock ...

    Non-Statutory Stock Options

    Compensation is an increasingly complex area designed to serve various objectives, such as enticing employees to remain with a company for a longer period of time or providing preferential tax treatment to the company. The type of compensation, such as stock options, is designed ...

    How do I Find the Year to Date Return on a Mutual Fund?

    One metric investors use to measure the recent performance of mutual funds is the year-to-date return, or YTD. This metric looks at how the fund has done since the start of the year. Since it measures just the performance during the year, knowing how far along during the year ...

    How to Trade the Dow Jones Index

    As the oldest and most widely followed U.S. stock index, the Dow Jones Industrial Average has tremendous visibility to both investors and the general public. Although you cannot trade a stock index directly, available derivative financial products let you pick the direction you ...

    How to Compute Return of Mutual Funds

    Mutual funds are a popular investment option because they allow you to invest in a plethora of stocks without having to individually manage all the buying and selling. However, you can still stay on top of the investment's performance by figuring the rate of return. To calculate ...

    How Are Stocks Issued Publicly?

    Stocks begin trading publicly in an initial public offering. The IPO requires a great deal of preparation and investment on the part of the listing company and can take months or even years to complete. Once stocks are issued publicly for the first time, company executives and ...

    How to Close a Mutual Fund

    If you've invested in a mutual fund but aren't getting the returns you expected, you have the option to redeem your shares and close your investment. By federal law, mutual funds must allow shareholders to redeem at any time, up to the full amount of their investment.

    How to Figure out Dow Jones Earnings

    The Dow Jones Industrial Average – known as “the Dow” or “the Dow Jones” – is an index that tracks the stock prices of 30 large “blue-chip” corporations in the United States. Investors follow the widely-reported Dow Jones’ ...

    What Is Better Gold Mutual Fund or Gold Itself?

    In troubled economic times, investors often turn to gold as a way to shore up an investment portfolio that is volatile. Gold investments usually perform in inverse relationship to the stock market, but are also driven strictly by supply and demand, and not by capital ...

    How to Find an Investment Portfolio Advisor

    Choosing the right investment portfolio adviser can be the difference between reaching financial goals and falling short. Investors should hire money management professionals they trust but also who can deliver desired results. To find this investment professional, investors ...

    Mutual Fund Functions

    Mutual funds are a kind of shared investment. When you buy shares in a fund, you become the owner of a group of securities or other assets in a pool with other investors. A mutual fund manager manages the fund, selecting the specific assets that will populate the fund, and ...

    What Kind of Mutual Funds Are High Return?

    Different mutual funds have different goals, strengths and management styles. One of the strategies mutual fund managers employ is to lower the risk of investment through diversification. To earn a higher return, however, you will have to invest in riskier operations. Other ...

    Buying Bonds Vs. Bond Fund

    If your investment objective is primarily to earn income, both individual bonds and bond funds can be attractive investments. Bonds are promises of companies to pay interest and principal back to investors according to a specific schedule. Bond funds are pools of investor ...

    What Is Shareholder Equity?

    Shareholder equity displays the net worth of a corporation. Shareholder equity also identifies the amount of money the company has received from the sale of its stock. Shareholder equity could be a combination of common and preferred stock, if both types were sold. Legally, ...

    Do Mutual Fund Fees Really Make a Difference?

    Mutual fund investing is promoted as a way for people to get into stock-market or other investing with less risk, and while using financial experts to choose these investments. Of course, that financial expertise comes at a cost, in this case, through mutual fund fees. While ...

    How to Open Mutual Fund Accounts for Minors

    Opening a mutual fund account for a minor is not a lot different from opening an account for yourself. Each of the states has passed either the Uniform Gifts to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA), both of which control how an account in a minor's name ...

    Market Order vs. Limit Order Stocks

    Investors who buy and sell stocks need to understand the workings of the markets and the types of orders which actually create trades. Stocks do not have fixed prices. A "hot" stock with a lot of potential buyers will increase in price. Stock of a company in decline or ...

    Disclosure Requirements for the New York Stock Exchange

    Stock markets are powered by information as much as money. That's why the exchanges that handle stock trades require companies to regularly disclose important information about their finances and operations. The 2,800 or so companies listed on the New York Stock Exchange must ...

    What to Consider When Choosing Mutual Funds

    Mutual funds are products that investment companies use to put your money and money from thousands of other investors toward different investments. When choosing mutual funds, research the history of the funds and consider the overall market performance, the management style of ...

    Kinds of Mutual Funds

    Mutual funds, which pool money from thousands of investors to purchase bonds, stocks and other investment products, range widely in their specific goals, styles of investment and management. Options include low risk products, solid and high-risk fund markets and products that ...

    Different Types of Bond Mutual Funds

    Mutual funds enable diversification of investments over broad portfolios of financial securities that are managed professionally. This would otherwise be prohibitively expensive for small investors to do. Fund managers pool large numbers of small investments to create mutual ...

    What Are Mutual Funds Load Charges?

    A mutual fund load is the commission you pay to buy a fund. Not all mutual funds charge a commission, but those that do typically offer various ways you can pay, known as share classes. Funds are legally allowed to charge up to 8.5 percent commission, but the competitiveness of ...

    Difference Between NYSE and AMEX

    The New York and American stock exchanges share much common ground in New York City's Lower Manhattan. The Amex evolved from the older NYSE and for many years the two exchanges operated in similar fashion, with trading floors only a few blocks apart. While the NYSE continues its ...

    What Do Quarterly Earnings Mean for Stocks?

    Stock prices are often extremely sensitive to quarterly earnings results. If a company surpasses the expectations of Wall Street analysts, investors are likely to celebrate the stock by purchasing shares. When results are disappointing, however, shares are likely to come under ...

    How to Identify a Forex Breakout

    The forex market, which is also known as the foreign exchange market, is one of the most liquid and widely traded financial markets. Changes in the market occur when one currency's value changes relative to another currency. This process can occur with tremendous force and ...

    How to Compute the Holding Period Return on an Investment

    Whether you invest in individual stocks, mutual funds or real estate, you want to know how well your investments are performing. The holding period return on an investment measures how well it did while you owned it. The holding period return can be measured in raw dollars or as ...

    Are the Best Mutual Funds Tax-Exempt?

    You have to pay taxes on the income produced by most of your investments, including mutual funds, regardless of whether this income is in the form of capital gains, interest or dividends. Some mutual funds specialize in investing in tax-exempt securities such as municipal bonds, ...

    How to Buy IPO Stock

    Initial public offerings occur when a private company comes to the public markets for financing by selling its stock. Big U.S. IPOs typically occur on the NASDAQ or the New York Stock Exchange to great anticipation. After the underwriting bank gives the first price to the stock, ...

    What Does It Mean if Stockholder Equity Is Less Than Total Liability?

    Stockholder equity and liability are the sole sources of funds in a firm. The ratio between equity and liability is critical, since it influences the firm's long-term viability. Firms with excessive liabilities may run into severe trouble, even if they are otherwise successful ...

    What Is a Bond Margin?

    Taking advantage of an investing opportunity is difficult if most of your assets are tied up elsewhere and you don't have immediate access to large reserves of cash. Purchasing bonds on margin allows you to invest more than you could otherwise afford by borrowing it from your ...

    REITs vs. Stocks

    Real estate investment trusts, which are known as REITs, and stocks are both types of investment vehicles. REIT investors hold shares in a trust that owns and manages a collection of real estate properties or mortgages, while stock investors purchase shares in the ownership of a ...

    The Differences Between Ranging & Trending in FOREX

    The forex markets, also known as foreign exchange or currency markets, are transparent and liquid capital markets with nearly 4 trillion dollars a day of trading turnover. They reflect the value of one currency relative to another currency. Currency prices fluctuate in ...

    Is the Call Option Price Affected by a Rise in Strike Price?

    Options are financial contracts that give you the right, but not the obligation, to buy or sell a specific security at a set price, called the strike price, for a predetermined period. The two primary types of options are calls and puts, but call options are the most commonly ...

    Sell Volume Vs. Buy Volume Stocks

    When you follow stock prices, you can use stock charts that track the daily ups and downs of each stock. These stock charts tell you not only how the price changes each day, but how many people bought and sold each day. The number of shares changing hands is called volume. The ...

    7 Levels of Investors

    John R. Burley is an active investor and author who teaches the idea of seven different levels of investors. According to Burley, every person falls into an investor level and most stay on that level, which prevents financial success indefinitely; however, with the will to ...

    How Does a US Savings Bond Work?

    United States savings bonds are a low-risk entry point into the world of investing. Issued and backed by the federal government, savings bonds are a long-term investment product that generates a fixed amount of interest and can offer income tax and education benefits to the ...

    What Is a Cumulative Dividend?

    Dividends on preferred stocks have a different quality from those paid out on common shares. Preferred stocks are senior equities when compared with common stocks and have first rights to a dividend. Common shares are paid dividends only when the preferred shareholders are paid ...

    How do I Buy NASDAQ Stock?

    If you want a piece of some of the country's hottest tech firms, you're going need to get up to speed with how to invest in NASDAQ stock. NASDAQ indexes were home to around 3,400 listed companies with a combined market capitalization of $6 trillion as of October 2012. Once a ...

    How to Check Mutual Fund Prices

    Unlike stock and other securities prices, a mutual fund’s share price, or net asset value, updates only at the end of each trading day rather than constantly. During market hours, a mutual fund’s investments and shares outstanding fluctuate, which makes it tough to ...

    What Causes Equity to Change?

    The concept of equity plays an important role several industries, such as real estate, business management and venture capital. The most common use of the term is in real estate, to describe the estimated value of a homeowner's interest in a property after deducting liens. In ...

    Variable Annuities Vs. Index Annuities

    For investors who have maximized their individual retirement account or 401k contributions, annuities can offer another path to tax-sheltered growth. Fixed annuities are simple contracts, with the issuer paying a guaranteed minimum return during the investment period and ...

    How do I Invest in Gold ETF?

    Exchange traded funds are mutual funds that are traded directly on the open stock exchanges. These funds offer some key advantages over regular mutual funds --- namely, lower expenses. ETFs will fluctuate in value throughout the day over the course of normal trading, whereas a ...

    Are Tax-Free Municipal State Bonds Also Federal Tax-Free?

    When it comes to the interest on your bond investments, it's not how much you make that counts but how much you get to keep. If you are in a high income tax bracket, you might do better investing in tax-free municipal bonds, even if they pay a lower interest rate than comparable ...

    What Is the Difference Between the NYSE & NASDAQ in Terms of Market Capitalization of Stocks?

    Although the New York Stock Exchange and the NASDAQ are the two largest exchanges in the world by market value, the older NYSE is the much larger of the two. The big NASDAQ-listed companies continue to help the smaller market compete and as of 2012, the NASDAQ includes the ...

    Can Grandparents Take a Tax Deduction for Contributing to 529s for Grandchildren in Pennsylvania?

    A 529 plan is a college savings plan designed to help build wealth to pay for college expenses. Each 529 plan has a single named beneficiary whose college education can be funded with the 529 funds. The major benefit of all 529 plans is that money invested in them enjoy ...

    What Are the Differences Between 20 Year Bonds Vs. 1 Year Bonds?

    When you buy a bond, you are loaning money to the issuer in exchange for the promise of regular interest payments and a return of the face value of the bond upon maturity. Bonds can be categorized in a number of ways, including the length of time they continue to pay interest. ...

    Selling Call Options for Income

    Buyers of call options do so to speculate on the rising price of the underlying stock. On the opposite side of the options trade is the seller, who receives the money paid for the call options. Selling call options can bring a steady stream of money into your brokerage account. ...

    How to Transfer Stocks From One Broker to Another

    If you need to move stock from one broker account to another, you can use the Automated Customer Account Transfer Service (ACATS) to execute the transfer electronically. The Depository Trust and Clearing Corporation developed this system to speed up transfers of securities ...

    What Are the Benefits of Bull Call Spread?

    Spread strategies with options allow traders to tailor the risk/reward characteristics of their options trades. A bull call spread is appropriate if you want to profit from a projected price increase of a specific stock. With a properly constructed bull spread, the potential ...

    What Are the Benefits of Having an Investment Portfolio?

    The benefits of having an investment portfolio can be far-reaching, possibly lasting for generations to come. Wise investing can help an individual not only to guard his initial investment but also grow that capital to levels that it would not otherwise have attained. With ...

    Investment Risk Insurance

    Wherever there is investment, there is a risk. However, the range of risk can vary significantly. Risky investments can be very attractive because they usually offer the prospect of higher returns. It so happens that you can find some of the most attractive, and riskiest, ...

    What Is Speculation in Stocks and Commodities?

    Speculation in stocks and commodities is the process of engaging in risky bets to try to generate robust returns. Most speculation is based on profiting from short-term movements in financial markets to try to benefit from quick, volatile movements in stock or commodity prices.

    How Do I Screen for Falling Stocks?

    Sinking stocks commonly grab news headlines, but you do not have to wait for a breaking story to alert you to beaten-down equities. A free stock screener searches a database of stocks to generate a list of ones that meet your criteria. Many screeners allow you to search for ...

    How Much in Taxes Do You Pay on Stock Market Earnings?

    When you sell stocks and make money on the transaction, you must pay tax on your gains. However, the amount of tax may vary, depending on when you buy and sell. On some stocks, you pay capital gains tax. On others, you pay the same rate as your regular income.

    Risk & Return on Mutual Funds

    Mutual funds attempt to lower the risks associated with investment through diversification. Even if one or two of the fund's holdings crash completely, the fund itself will not flat line and can still even generate a profit. However, mutual funds are not immune to risk. It is ...

    What Is Stock Options Backdating?

    Stock options backdating allows a company to inflate the profit that executives or other employees stand to receive from their stock options. By acting as if the options were issued earlier than they really were, backdating potentially widens the spread between the price that ...

    How Would a Yield Curve Change if People Prefer Short-Term Bonds Rather Than Long-Term Bonds?

    A yield curve is a visual representation of interest rates in an economy. This relatively simple graph captures indispensable information about the preferences of lenders and borrowers. Various factors can influence the shape of the yield curve. A shift in demand toward ...

    Do Bonds Compound Interest?

    Compound interest means the interest you earn on an investment gets added to the value of the investment before the next interest gets calculated. For example, if you had $5,000 in an investment and it earned $10 interest, the next time you earn interest it is calculated on ...

    Do You Want a Higher Dividend Payout Ratio or Stock Growth?

    Choosing stocks that hold promise of rising market values or dependable dividend payments really depends on the types of goals an investor holds. Dividend yields are attractive, but if they are coupled with a falling stock price, the investor may lose money on the investment. On ...

    Difference Between Forward & Trailing Dividends

    Dividends are a major source of income for some investors. When stock prices fail to advance much, dividend payments can provide a relatively dependable revenue stream. Look at past and projected dividends of the stocks in your portfolio. Forward and trailing dividends help you ...

    How to Read a Company Balance Sheet for Investing

    Investors should study the balance sheet of a firm in order to properly evaluate how efficiently a company employs assets to generate cash for operations and manages liabilities to fund growth. Companies unable to manage assets and liabilities must eventually seek outside ...

    What Does a Payout Ratio Tell?

    When researching a potential investment, dividend payout ratio is a good statistic to know. This number reveals how much of its earnings a company is returning directly to shareholders. At the discretion of company management, dividend payout is a good clue to how a company ...

    What Is the Advantage of Mutual Funds?

    When you want to invest in stocks, you find thousands to choose from. You may find it difficult to know if one company performs better than another. If you choose incorrectly, you could lose your money. With mutual funds, much of the risk is reduced for you. Mutual funds invest ...

    How Is Investors' Money Invested in a Mutual Fund?

    Mutual funds combine investors' money to buy hundreds of stocks, bonds or real estate securities, and some Treasury notes and bills. The small investor is able to own the stocks of hundreds of companies for the price of one share in a mutual fund. If one investment vehicle ...

    Can Mutual Funds Fail?

    When you express interest in buying shares of a mutual fund, the fund company sends you a prospectus. This document explains what the mutual fund invests in. This prospectus also includes a disclaimer notifying you that your investment can lose value. While mutual funds offer ...

    At 50 Years Old, Should I Hold Bond Funds in a Portfolio?

    A 50-year-old investor should hold some bond funds in a portfolio. An individual at this age could traditionally retire in another 10 to 15 years. Too much exposure to equities, or stocks, at this age could result in declines in an investment portfolio that might not be regained ...

    The Difference Between the Stock Market & Stock Exchange

    The stock market represents the companies that list equity shares for public investors to buy and sell. Stock exchanges are the infrastructure that facilitate the trading of those equity securities, or stocks. Without a stock exchange, companies would have no formal mechanism on ...

    7 Categories to Classify Stocks

    A stock gives an individual a share of ownership in a company. Stocks, a common investment vehicle, are available in different categories. Many of them have similar characteristics, such as moving in the same direction. Some stock categories are better investments than others, ...

    What Are the Primary Advantages & Disadvantages of Index Mutual Funds?

    Index funds are designed to match the investment results of a specific market index. An index fund can include either stocks or bonds in its portfolio, and these mutual funds vary in the tactics that they employ to achieve returns in line with their chosen index. Index funds ...

    The Pros & Cons of Tax-Deferred Annuities

    A tax-deferred annuity is an investment vehicle used by an individual planning his retirement income. It is sold by insurance companies, and it offers fixed or variable rates of return. A tax-deferred annuity grows tax-free until retirement. The funds accrue through monthly ...

    What Composes Stockholder Equity?

    Stockholder equity, also known as shareholder equity, represents the amount of money investors paid for stock in the company, along with the accumulated retained earnings since the organization's beginning. Retained earnings are all net profits of the company that have not been ...

    Advantages & Disadvantages of Stock Mutual Funds

    Many investors use stock mutual funds as a cornerstone of their investment strategy, and they profit soundly over the long term as a result. They cite professional management and the potential for good growth among the reasons for their choice. Others may find these investments ...

    What Does "Net Change" Mean in the Stock Exchange?

    Net change indicates whether a stock is increasing or decreasing in value. It is based on the actual trades of each stock and is reported at the end of each trading day. It is calculated both by the exchange or trading system and by various stock market reporting services that ...

    The Disadvantages of Tax Free Bonds

    The Internal Revenue Service considers any kind of income, including the interest on bonds, to be taxable unless it is specifically exempted by law. The interest on most municipal bonds has traditionally been exempt from federal income taxes, and was finally codified by the Tax ...

    Stocks Vs. Bonds

    Stocks and bonds are widely used financial instruments for investing. They differ in the variety of their issuers. Stocks are limited to public companies.Bonds include not just public companies but private companies, nonprofit organizations, and local, state and federal ...

    The Purpose of Mutual Bond Funds

    A bond mutual fund is an investment portfolio containing bonds for a pool of investors, who buy shares in the fund. Bond mutual funds are a popular tool. The Investment Company Institute notes that half of the households that owned mutual funds in 2009 had at least one bond ...

    How do I Calculate Day Trading Buying Power?

    If your brokerage account has been designated as a pattern day trading account, you benefit from a higher level of potential margin loan leverage, often referred to as buying power. The state in which you leave your trading account at the end of the day sets up your buying power ...

    Benefits of Investing in Taxable Accounts

    While much focus in the financial world is on tax-advantaged investing in retirement accounts, such as an individual retirement account or 401k, taxable accounts have benefits that may make them worthwhile for you. If you are looking for liquidity or to save for an early ...

    Difference Between Market & Limit on Stock Purchases

    Buying and selling shares of stock can be a little more complicated than just giving your broker an order to make the trade. Brokers -- both live and over the Internet -- accept different types of orders that allow you to have some control over the pricing and timing of your ...

    Role of Hedge Funds in the Stock Market

    The role of hedge funds has evolved since the first hedge fund trading strategy was used in the mid-20th century. Since that time, the value of assets under management at hedge funds has ballooned, as has the number of trading strategies that fund managers have designed. Hedge ...

    ETF Vs. Stocks

    Stocks and exchange traded funds are popular investments with individual and institutional investors. Stocks represent ownership of a company, and the percentage of ownership depends on how many shares you own. An ETF is similar to a mutual fund except that it trades throughout ...

    Ratios Used in Predicting Stock Prices

    Investors typically seek to profit from a stock by buying low and selling high. To achieve this, an investor must purchase the stock at the right price. Predicting stock prices is not an exact science, but certain financial ratios can help investors decide whether an investment ...

    What Happens When the Intrinsic Value Equals the Price of a Stock?

    An option is a financial contract that gives the owner the right, but not the obligation, to buy or sell the underlying security at a fixed price for a set period of time. The value of an option is a composite of two factors: the option's intrinsic value and its time value. When ...

    NASDAQ Premium Income & Growth Fund

    The NASDAQ Premium Income & Growth Fund provides an interesting investment twist on one of the most popular investment products trading in the U.S. This closed-end fund goes by the stock symbol QQQX. If you are familiar with the stock market and technology stocks in ...

    What Is the Difference Between Large Cap & Small Cap Stocks?

    Large-cap stocks and small-cap stocks are two of the three primary categories of stocks as measured by size. The third category is mid-cap stocks. "Cap" is short for market capitalization, which is a way of measuring a company's size by multiplying its outstanding ...

    Unit Investment Trust Funds

    Although unit investment trusts are not as well-known as mutual funds and exchange traded funds, UITs may have a place in your investment portfolio as an alternate type of investment product. With a unit trust, an investor is buying into an investment product with a fixed ...

    Requirements for Buying Stocks on Margin

    In margin accounts, traders borrow money to pay for stocks and other security purchases. Borrowed funds add to the risks of investing and trading, and the inattentive investor might find himself with a mountain of debt instead of the healthy returns he hoped for. Careful ...

    How to Invest in No-Load Mutual Funds

    No-load mutual funds let you purchase and sell shares without paying a transaction fee, also known as a load. If the fee is charged when you purchase shares, it is called a front-end load. Fees on the sale of shares are known as back-end loads. No-load funds do not have these ...

    Disadvantages of Mutual Funds

    Investors in the Netherlands originated the idea of asset pooling in the 18th century as a way to help small investors get skin in the game. When Holland’s King William I learned of the idea, credited to merchant Adriaan van Ketwich, he put his stamp of approval on it so ...

    Day Trading Vs. Long-Term Investing

    Long-term investors hold onto shares for years before selling them. Purchasing a stock and selling it on the same day is known as "day trading." Day trading has the potential to produce high returns in short periods of time, but it is much riskier than long-term ...

    How to Determine a Short Interest Stock

    The short interest of a particular stock is the number of shares that have been sold short by traders. Short selling is the technique of selling shares a trader does not own and buying them back later. It is legal, and it is a way to profit from falling share prices. Almost ...

    Difference Between the Total Stock Market Fund & the 500 Index Fund

    The concept of index funds -- both mutual and ETFs -- developed around the idea of mirroring the returns of the widely followed S&P 500 stock index. Although funds that track the S&P 500 are still among the largest index funds, total stock market index funds have become ...

    Are Individual Stock Market Gains Taxable?

    The Internal Revenue Service gets a share of any profits you make from investing in stocks. Stock gains fall under the capital gains tax rules. An understanding of the capital gains tax consequences from your investments is an important part of your investing knowledge base.

    Publicly Traded Vs. Private Stocks

    Public and private firms differ in their ownership and source of capital. While any investor can purchase stock from a public company, only select investors and venture capitalists are invited to invest in private firms. While this gives public firms an advantage when it comes ...

    How Does Buying Stocks Work?

    Buying stock is a little like asking a neighbor to buy something for you at a store. With stocks, you give the neighbor, called a broker, an order saying what you want to buy and perhaps how much you're willing to pay. The broker puts that order through some trading system and ...

    Factors That Influence Stock Prices

    Stocks are the most volatile asset class in the financial markets. They gain and lose value erratically at times and can go from the biggest, high-flying investment to a penny stock seemingly overnight. Sometimes the factors that move the market value of stocks are predictable, ...

    How to Find Dividend Yields on a List of Stocks

    A stock’s dividend yield is important information for investors who want an income stream or extra money to reinvest. The yield represents a stock’s annual dividends per share as a percentage of its price. The higher the percentage, the more dividends you get per ...

    How to Determine the Price to Pay for a Call Option

    Mathematicians have developed pricing models and formulas to determine how much a call option should cost. Unfortunately, you do not get to decide how much to pay for a listed call option. The market forces of supply and demand set the prices of options, and your choice is which ...

    High Yield Vs. Investment Grade

    High yield and investment grade represent opposite ends of the spectrum for bond ratings. Different degrees of risk and reward are associated with high-yield and investment-grade bonds. Investors who are willing to accept a larger degree of risk in their portfolios are better ...

    Bond Fund Expense Ratios

    When compared to stock funds, a bond fund purchase primarily rests on the distribution yield. If you have the choice of two bond mutual funds with similar portfolio characteristics, you will probably choose the fund with the higher yield. The expense ratio of a bond fund ...

    Value Date Vs. Trade Date on Forex Statements

    In foreign exchange, or forex, trading, it can be easy to forget that your trades involve real currencies and that somewhere, someone is actually exchanging euros for dollars or whatever currency pairs are involved in your transactions. If you decide you want that $100,000 worth ...

    Exchange Traded Fund Vs. Mutual Fund

    Exchange traded funds (ETFs) and mutual funds both use pools of investor money to buy securities, a technique which spreads the risk of buying and selling individual stock shares. Mutual funds have been around since the 1920s and about half of American households have some ...

    What Is the Opening Time for the New York Stock Exchange?

    The New York Stock Exchange, a subsidiary of NYSE Euronext, is the preeminent exchange for the majority of the stock transactions in the United States. It's trademark bells sounds the opening and closing of trading each day. These bells sound promptly at 9:30 a.m. Eastern time ...

    Trade Vs. Settlement Date

    The Securities and Exchange Commission requires all security transactions to be completed or “settled” within three days. The clock starts ticking on the trade date — the date you actually buy the security, such as a stock or bonds. The settlement date is ...

    Custodial Account vs. Guardian Account

    Custodial and guardian accounts are similar, but have a few major legal differences. The primary creators of both accounts are often parents or grandparents of the account owner, who is known as the beneficiary. Custodial accounts are available at most banks and credit unions ...

    Investing in Tax-Free Bonds

    A well balanced investment portfolio should include bond holdings in addition to stocks, mutual funds and other investments. The large variety of bonds available can make choosing the right ones a challenge. A common choice for investors who prefer tax-free investments are ...

    Types of Investments: Stock, Bond & Insurance

    Stocks and bonds are the most common types of investments, although they serve different purposes. Investors in the stock market typically seek to grow their capital, while traditional bond investors are more concerned with protecting their assets. An example of an insurance ...

    What Do I Need to Know About Step-Up Bonds?

    When interest rates are low or rising, investors may be reluctant to invest in bonds because they don't want to miss out on higher future rates. Step-up bonds allow you to take advantage of the stability of bond payments and benefit from interest rate rises because the coupon or ...

    How to Open and Contribute to a 529 Plan

    In 2009, college tuition cost an annual average of $21,189, according to the National Center for Education Statistics. Only the most affluent can afford to write a check for the whole expense without prior planning. Everyone else can prepare for higher education costs by making ...

    Futures Vs. Stocks

    The futures market and stock markets are two distinct and separate securities trading venues. Each side has its own exchanges, regulatory agencies, brokers and jargon. An investor or trader may choose to focus on one market -- futures or stocks -- or use both to broaden ...

    The Importance of Knowing the Value of Stocks

    Without knowing the proper value of stocks, investors are hard-pressed to find the right time to buy or sell shares. Investors might miss out on buying and selling opportunities if they base investment decisions solely on a stock's market value. There are ways to evaluate the ...

    What Are the Dow Jones Industrials?

    When you hear commentators say the market was up today or the market was down, they’re usually talking about the Dow Jones Industrial Average, or the Dow. The Dow is an index of 30 large blue-chip stocks traded on the New York Stock Exchange and Nasdaq, and its movements ...

    The Impact of Earnings Announcements on Stock Prices

    Stock prices can rise and fall based on a company's earnings performance, because profits reveal the financial health of a business and also indicate the economic conditions for earning profits more broadly. Long-term investors may not be swayed by one quarter of disappointing ...

    Mutual Funds Pros & Cons

    According to the U.S. Census Bureau, 7,581 mutual funds existed at the end of 2010, holding $11.8 trillion in assets. Mutual funds collect money from investors and use this pool of money to purchase investments that fit in with the fund's overall philosophy. While many people ...

    Advantages & Disadvantages of Equity Capital

    Business management and the board of directors determine a company's capital structure, which usually consists of both debt and equity capital. Unlike lenders, equity investors receive an equity share in a business in exchange for a financial or other contribution to the ...

    Are Saving Bonds Taxable?

    U.S. savings bonds typically offer lower interest rates than other investments, but the return is guaranteed by the federal government, so you're unlikely to lose money because the government won't default. Savings bonds are subject to federal income taxes, but you can choose to ...

    Risks in Bond Funds

    Bonds are often touted as the safest asset class for investors, and in many ways they are. They don't have the volatility of equities and provide ample liquidity in the secondary markets or via selling mutual fund shares. Nonetheless, bond investment funds introduce investors to ...

    What Type of Mutual Fund is Abalx?

    ABALX is the ticker symbol for the American Balanced Fund, the Class A shares of a mutual fund run by American Funds. American Funds traces its lineage back to 1931. The American Balanced Fund history dates back to 1933, but the fund in its current inception was founded in 1975. ...

    What Is an Open-End Mutual Fund?

    If you invest in or are researching mutual funds, most will be open-end funds. The terms "open-end fund" and "mutual fund" are interchangeable. A mutual fund's open-end features set it apart from an exchange-traded fund or a closed-end fund.

    What Is a Growth Stock Mutual Fund?

    Growth stock mutual funds are portfolios that are managed by professional investors. These investment portfolios have exposure to growth stocks, which are companies whose stock prices do not appear to have reached their full potential yet. Fund managers use formulas to identify ...

    Does a Stock Market Loss Reduce Tax Liability?

    A loss resulting from the sale of stock is tax deductible. Since the deduction reduces your taxable income, a stock market loss reduces your tax liability. Stock market gains or losses only count when the shares are sold. Until then, they are “unrealized” gains or ...

    Choosing a Good Investment Firm

    Some people turn to relatives or friends when seeking investment firm referrals or advice, but it’s not the best idea to sign on with a relative or friend. If your portfolio crashes and burns, so can your relationship. Instead, consider as many investment firms as time, ...

    Exchange-Traded Stock Options

    If you are considering options as a trading venue, you most likely will trade exchange-traded stock options. A stock brokerage account with options trading privileges is all you need to get started with options trading. The size and diversity of the exchange-traded options ...

    How Does the Volatility in Equity Markets Affect a Portfolio?

    Of all the asset classes, equities are the most volatile. Stock prices can reverse course even in the middle of a trading session, turning what at first appears to be market gains into a loss. While volatility can be measured by the Chicago Board Options Exchange Market Index, ...

    ETF Vs. Mutual Fund Comparison

    Although the two product types are very similar in many ways, exchange-traded funds and mutual funds offer very different options for investors. The contrasts allow an investor to pick the product that fits her specific goals or strategies. One is not better than the other, and ...

    How to Invest in Stocks: Tricks & Tips

    Investing in stocks does not need to be confusing or overwhelming. If you use some tried-and-true techniques, you can invest and monitor your investments without stress. Once you have learned a few trick and tips for investing in stocks, you can put your money to work for you.

    Mutual Funds Explained

    Mutual funds are an investment vehicle inclusive of many investor types, including those with small or large investment portfolios. Investors purchase shares of a mutual fund through a broker or directly from the fund. This type of investment comes with notable advantages and ...

    How do I Find Out the Value of a U.S. Savings Bond?

    The U.S. Treasury Deparment aggregates all savings bond information through its TreasuryDirect website. It contains all the information needed to find out the value of current and past bonds. You can find out the value of a U.S. savings bond by following a few straightforward ...

    Mutual Funds vs. Company Stock

    Mutual funds can be attractive because they allow investors to gain exposure to many different financial securities at once, something that the average investor does not have the resources, time or expertise to do alone. Investing in an individual company's stock also has its ...

    What Is an Index Mutual Fund?

    A mutual fund collects money from a large number of investors to buy assets such as stocks and bonds. The fund's holdings are divided into shares, and each investor profits from the growth and income of the shares owned. An index mutual fund is one that strives to match the ...

    How to Invest in a Dividend Reinvestment Plan

    Many companies offer dividend reinvestment plans, or DRIPs, so that investors can buy shares directly and have any earned dividends reinvested into more shares of stock. DRIPs provide a low-cost way to regularly invest in dividend paying stocks. The reinvestment of dividends ...

    How to Invest in Biotechnology Stocks

    It’s a marriage made in heaven: 6,000 years of biological science meets the world of technology. Together, this dynamic, emerging industry is focused on improving life in myriad ways. Thanks to biotech advances, diseases are cured, people are fed and innovation thrives. ...

    Is ETF a Mutual Fund?

    While exchange-traded funds, or ETFs, and mutual funds are certainly related, and although ETFs are structured similarly to their industry counterparts, they each have unique roles and as such are treated as separate investment products. Mutual funds have been around since the ...

    How to Change a Name on a Mutual Fund Account

    Investment advice varies from one expert to the next. But they all seem to agree that diversification -- distributing your capital among different money-growing options -- is the best way to get the best return for your money. Mutual funds seek to help you to do just that by ...

    Dividend Policy Changes & Stock Price Reactions

    Some investors buy shares of a stock specifically for the dividend payout, and corporate executives know this. Nonetheless, sometimes companies have no choice but to make changes to the dividend policy for reasons such as slowing profits or a preference to invest in the business ...

    Active Vs. Passive Investment Management

    Active and passive investing represent opposite approaches to money management. Active management involves the selection of individual financial securities and the trading of these shares in response to the markets. Passive mutual funds and exchange-traded funds do not trade ...

    The Difference Between Closed-End & Open-End Mutual Funds

    Investing in assets such as stocks that have the potential to increase in value is a common wealth creation strategy, but putting too much money into any individual stock is risky. Mutual funds are professionally managed investments that hold a variety of underlying assets like ...

    How do I Invest in Dow Jones Stocks?

    The Dow Jones Industrial Average, sometimes referred to as the DJIA or simply as the Dow, is one of the most recognizable stock indices in the world. The Dow tracks the market price of the common stocks of 30 blue-chip U.S. industrial corporations. Investors who are interested ...

    List of Mutual Fund Newsletters

    Money managers use mutual funds to pool together money from multiple small investors to invest in securities like bonds, stocks and money market instruments. These mutual funds give small investors a chance to invest in more expensive stocks while having access to professional ...

    Hedge Funds and Retirement Planning

    The role of hedge funds in retirement planning has grown since the economic crisis of 2008. Many public pensions became severely under-funded, meaning that liabilities grew relative to assets and administrators needed to take on more risk in order to potentially increase ...

    Types of Derivative Securities

    Many investors use derivative securities as a way to hedge their investment portfolios against certain risk. A derivative security derives its value from another underlying financial security. Derivative securities come in several types, including forward, future, swap and ...

    How Can I Buy Stocks at a Low Fee?

    The growth of online stock brokerage accounts has led to a steep decline in the cost of buying and selling stocks everywhere. The Smart Money 2012 annual broker survey noted that the average discount commission had declined by more than 70 percent since 1994. There are several ...

    Comparison of Bond Funds in America

    Investing in U.S. bond funds is an effective method for building a diversified, balanced investment portfolio. These investments provide investors with stable income streams and professional management to handle assets within the fund on a daily basis. You can choose from ...

    Mutual Funds NAV Calculation

    Investors who own shares of a mutual fund need a way to compare their fund’s performance to broad market benchmarks such as the Standard & Poor’s 500 or an industry-specific market index. Valuing a mutual fund can be difficult because mutual funds are comprised ...

    Definition of Fractional Stocks

    Investors often see a fraction of a share listed on account statements from companies or mutual funds they have invested in. Fractional stock can occur due to stock splits, mergers or when some if the money you invest is left over after whole shares have been purchased. ...

    What Stocks Benefit From a Drop in Commodities

    Many companies can benefit from a decline in commodity prices. Industries that have expenses that are related to movements in commodity prices can directly benefit if their input costs decline. Transportation companies, chemical companies and animal feed companies are a few ...

    Safe Investments for a Coming Crisis

    If even the thought of a coming crisis keeps you hypervigilant day and night, it’s hard not to conjure up fantasies of watching investments crash and burn as you sit by helplessly when the economy acts up. But you can insure against the most catastrophic outcomes by ...

    Bond Portfolio Vs. Stock Portfolio

    Stocks and bonds are in non-correlated asset classes, which means that under stable economic conditions, they gain and lose value based on separate sets of factors. As a result, the risks associated with a bond portfolio are quite different from those of a fund filled with ...

    What Does SMA Mean Regarding Stocks?

    If you're an independent investor, get to know your stocks better by doing some basic chart analysis. By understanding indicators such as the simple moving average, or SMA, you can follow the price trends of your securities. You will also gain insight into the often-obscure ...

    Financial Planning and Mutual Funds

    Mutual funds can play a vital role in your wealth-building. When you plan for your financial future, you examine not only how you can increase your net worth with income, but also how you can increase the value of your portfolio through investing. All investments carry risks. ...

    Common Vs. Preferred Shares

    Corporations issue stocks to raise funds for business operations, expansions, and to pay down debt. Stocks are placed in two broad categories – common and preferred shares. Purchasing common stocks gives investors a certain percentage of equity within the issuing company. ...

    What Are the Advantages & Disadvantages of Investing in a Bank Account?

    A bank account is probably not on your list of hot investment ideas, but the various options a bank offers might fit some of your needs. Banks pay different interest rates on different accounts, and you typically earn more the longer you are willing to let your money sit. While ...

    What Is "SIP" in a Mutual Fund?

    The acronym "SIP" stands for Systematic Investment Plan. It is also called a periodic payment plan or contractual plan. A SIP is one of many regular investment programs available to people interested in investing in mutual funds. Periodic payment plans were initially ...

    How to Determine Stock Prices in a Constant Growth Model

    The constant dividend growth model, or the Gordon growth model, is one of several techniques you can use to value a stock that pays dividends. Because a company can potentially exist without end, this model assumes that a stock will continue to grow its dividends at a constant ...

    What Is a Bear Futures Spread?

    The bear future spread is an investment strategy where two futures contracts are in play. The first is a near-term contract to sell in which the investor bets that prices of an option or commodity will drop. This is paired with a long-term futures contract to buy when prices are ...

    How to Find the Rate of Return on Investments

    The rate of return measures the performance of your investment as a percentage of the amount you put in. The overall rate of return tells you how much you've made over the life of the investment, but it doesn't necessarily tell you how well the investment performed if you don't ...

    The Mutual Fund Liquidity Ratio

    Mutual funds are large pools of money managed by professionals on behalf of individual investors. Mutual funds differ from each other in various regards. The liquidity ratio is a measure that can provide valuable insights into the strategy of a mutual fund and its future ...

    Roles & Functions of the Stock Exchange

    A stock exchange standardizes investments, allowing people to buy or sell discrete and equal shares of ownership in various companies. It facilitates the transfer of funds between investors and businesses, regulating as necessary to provide maximum safety for everyone’s ...

    Mutual Fund Load vs. No Load

    Mutual funds come in two major types, load and no-load funds. A load fund charges a percentage of the investment, usually when you purchase shares, and pays this percentage to a broker who sold the fund. A no-load fund does not charge this fee. While you invest less principal ...

    Front Load on a Mutual Fund Explanation

    Mutual fund firms typically allow people to buy shares in their funds directly through the company. However, depending on how the company categorizes these shares, investors may have to pay a sales charge or an annual fee. One type of sales charge is called a front load, or ...

    How to Figure the Weighted Average of Common Stock

    The number of common shares outstanding determines how many tiny pieces a company is broken into on the market. For example, if a company has 100,000 shares, each share represents ownership of 0.001 percent. Since companies can issue shares and repurchase shares, you need to ...

    How to Short Stocks

    In the stock market, short selling -- or just shorting -- stocks is the strategy of selling shares you do not own and buying them back later. You are able to sell shares you don't own because your stock broker will lend them to you. The goal of a short trade is to buy the shares ...

    What Percentage Should I Set for a Stop Loss When Investing in the Stock Market?

    Stock investing means risk, which you can control. Instead of simply plunging in with money you might not be able to lose, you can protect your stake with a stop loss order. Experienced investors always use stops, and those who don't will sooner or later regret their oversight. ...

    Strengths & Weaknesses of Variable Annuities

    Variable annuities are one of investing's most fraught tools. While these investments do offer a number of benefits, there are almost as many drawbacks, making them difficult to understand for the uninitiated. Knowing the inherent strengths and weaknesses of variable annuities ...

    What Is the Gray Market for Stocks?

    From trendy Grey Goose Vodka and “Vogue” magazine’s perpetual love affair with the color to the TV show “Grey’s Anatomy,” the color gray is considered trendy, sophisticated and classic, but the first over-the-counter financial securities ...

    How Do I Invest in Blue Gold?

    If you’ve got a dynamic mix of gold, stocks and futures that run the gamut from speculative to safe holdings, you could be set for the long haul. But you may wish to join a growing audience of savvy investors who believe that adding blue gold to the mix makes perfect ...

    What Is the Difference Between Buying & Trading Stocks?

    Buying stocks and trading stocks are two very different approaches to participating in the stock markets. At the simplest level, investors buy for the long-term, while traders usually buy and sell quickly to pick up short-term profits. Although investors and traders use very ...

    How to Figure the Percentage Yield on Mutual Funds

    Mutual funds allow thousands of people to pool their funds under the management of professional investors so they can create a diversified portfolio. However, not all funds are created equal. Though past performance does not guarantee future performance, the percentage yield ...

    Mutual Funds Class C Vs. D

    Many mutual funds are divided into different share classes designated by a particular letter, such as Class A. The most important difference between these classes is the loads, or sales charges, and fees investors must pay. Every fund company has a different fee structure for ...

    Is a Closed-End Fund Publicly Traded?

    A closed-end fund is a type of mutual fund. It pools a portfolio of different securities, and offers shares in the pool to investors. It uses investor money to buy more securities for its portfolio. There are many varieties of closed-end funds with different strategies, risks, ...

    Can a Parent Buy Stocks for a Child?

    Buying stock for your children can give them a financial head start. That stock can produce a regular stream of income if it pays dividends. It can also appreciate in value over time if the company does well. You can even use it as a tool to teach your kids about saving and ...

    What Does Reinvesting Capital Gains Mean?

    When taking a profit on the sale of an investment, or property, you have an important decision to make: what to do with the gain. Although there will be multiple options, the first and most basic decision is to either reinvest or not. No matter which way you go, and how much ...

    Do Savings Bonds Continue to Earn Interest After Maturity?

    All U.S. savings bonds have a final maturity date when they stop earning interest. Investors often lose track of this date because the U.S. Treasury Department has extended the original maturity of some bonds up to 30 years. The length of time savings bonds earn interest depends ...

    How to Invest in International Stocks

    International stocks can bring diversity to your stock portfolio. The economies of different countries around the world cycle at a different pace and focus on different industries. For example, Korea is strong in manufacturing, while companies based in Chile are more likely to ...

    Put Vs. Call Stocks

    Many investors favor stock options because they give you the opportunity to make money whether the stock market rises or declines. Stock options cost less than their underlying assets, they are potentially less risky, and they can yield a higher return than many other ...

    Questions About Mutual Funds

    Mutual funds collect money from shareholders and invest it in money market, bonds, stocks, options or futures securities. By investing in mutual funds, you'll benefit from professional fund management and reduced risk through asset diversification. However, before you invest, ...

    CD Vs. Indexed Annuity

    Some investment options are straightforward, but others are more complex. A certificate of deposit is a common type of investment that's relatively straightforward. In contrast, an indexed annuity is considered a sophisticated investment with complex rules. Investors can profit ...

    Investing Money as a Shareholder

    Purchasing and selling stocks is a fundamental way of investing in domestic and global markets. Investing money as a shareholder gives you the potential to earn a high return on your investment. You also inherit ownership rights within a corporation when you buy its common ...

    Warrants vs. Stocks

    The investing world offers the speculator a lot of options -- and warrants. If you're feeling confident about a stock but not ready to commit to buying the shares right away, you might consider stock warrants. If your optimism is justified, you'll profit handsomely.

    Whose SSN Should Be on a 529 Plan?

    A 529 Plan is a tuition program that qualifies for certain tax benefits. The investment the accountholder makes on behalf of a student is tax-deferred. The account’s earnings and contributions are also tax-exempt if the money is withdrawn to pay for eligible ...

    Capital Gains on Selling Tax Exempt Bonds

    A municipal bond represents a loan to the issuing municipality, in exchange for regular interest payments and the promise of a return of the face amount of the bond upon maturity. Investors in high-income tax brackets can benefit from buying municipal bonds because their ...

    Do You Make More by Investing in Low Price Stocks Rather Than High Price?

    Low price stocks have the advantage of costing less than high price stocks, but they have a tendency to be more volatile. Low price stocks that trade for less than $5 a share are commonly known as "penny stocks," which are issued by companies whose share prices can ...

    What Are Spiders in the Stock Market?

    Exchange-traded funds based on the Standard & Poor's 500 Index of common stocks are known as "Spiders" because of their formal name -- Standard & Poor's depository receipts, or SPDRs. They trade on the American Stock Exchange under the symbol "SPY." ...

    How to Calculate the Value of Stock With the Price-to-Earnings Ratio

    The price-to-earnings ratio is one of the most common financial ratios used to value stocks. This ratio measures the price investors are willing to pay for each dollar of the company’s earnings per share, or EPS. When investors like a company’s future growth ...

    Prices After a Stock Split

    A stock split will cause the share price to decline significantly. If you do not know a split is pending, the sudden drop in your share value can be a bit of a shock. However, a stock split does not change the total value of your stock position. You just end up with more shares, ...

    Difference Between a Basic Certificate of Deposit & a Jumbo

    A certificate of deposit is generally seen as a low-risk investment. Two types of CDs are available: basic and jumbo CDs. Both investments work in similar ways. But jumbo CDs require a higher deposit, they pay a higher interest rate, and they can carry more risk in certain ...

    Summary of Mutual Fund Regulations

    A mutual fund offers shareholders an opportunity to invest in stocks, bonds and other investments. Consumers who purchase mutual fund shares rely on the fund's management to choose buy investments that will earn the highest possible returns. Securities laws regulate mutual ...

    How to Buy Silver in the Stock Market

    In the 1970s, comedian Rodney Dangerfield complained to audiences that he got no respect from the people he met. The same could be said about silver, the precious metal that historically has taken a back seat to its coveted cousin, gold. But that doesn’t mean silver ...

    Investing in the Stock Market vs. Investing in Real Estate

    Few assets yield investors greater returns on their money than stocks and real estate. Although both investments can lead to great profitability, investing in one or the other may not fit your investment strategy. When determining where to invest your money, you should ...

    How to Trade Stock Using Margins

    Trading stock using margin means essentially borrowing money to invest in financial securities. Your brokerage firm lends you the money, and you agree to pay it back along with any associated fees. Margin accounts come with rules regarding how much money you keep in your account ...

    The Long-Term Rate of Return for Bonds Vs Stocks

    For many decades, investors have relied on the belief that over the long term, stocks will virtually always provide a higher return than bonds. Despite this fact, many investors incorporate bonds into a portfolio in an effort to minimize risk and provide guaranteed income. ...

    How to Trade the Gold Silver Ratio

    The gold silver ratio is a spread that reflects the value of gold relative to silver, and is calculated by dividing the price of gold by the price of silver. There are a number of regulated exchanges that provide access to investors looking to hold positions in the gold silver ...

    Federal Taxes on Municipal Bonds

    When it comes to interest income from your bond investments, factors to consider include the safety and stability of the issuer, the interest rate offered, and what's left after you pay taxes on the interest. For investors in a high income tax bracket, municipal bonds that pay a ...

    Are IRA Investments & CD Investments Insured Separately?

    Your savings and investments can take many forms, ranging from a readily accessible passbook savings account to a portfolio of stocks, bonds and real estate investment trusts. You might have all of your savings and investments, including your retirement accounts, with a single ...

    Convertible Vs. Nonconvertible Bonds

    While traditional stocks and nonconvertible bonds make up the majority of most portfolios, they're not the only savings vehicles available to investors. Convertible bonds are an ideal compromise between the two, offering the higher returns commonly found with stocks along with ...

    How to Find the NAV for a Mutual Fund for Any Day

    A mutual fund is a professionally managed investment pool. If you want to plunge into the stock market, a fund can provide a way to spread your risk with a diversified portfolio under the management of a professional. With multiple sources of digital and hard-copy financial ...

    How to Trade Oil on Stock Exchange

    The commodities futures exchanges are the traditional venues for crude oil trading. Futures trading requires a different account with a different type of broker than your stock trading account. However, the development of commodity tracking exchange traded funds, or ETFs, allows ...

    What Is the Difference Between Book Value & Market Value Per Share of Common Stock?

    Both book value and market value can be important tools for investors hoping to build strong portfolios. While the market price of each stock provides clues to a company's financial strength and future prospects, book value reveals the current state of the company and ignores ...

    What Is Mutual Fund Prospectus?

    With a seemingly unlimited supply of mutual funds to choose from, it can be tough to determine the best place to invest your money. The U.S. Securities and Exchange Commission, or SEC, requires every mutual fund firm to provide potential investors with a document called a ...

    What Are the Functions of Private Equity?

    Private equity firms invest either by purchasing businesses outright or by obtaining some ownership stake in companies. They are generally on a five- to seven-year plan, and upon owning a company for that length of time they plan an exit strategy. Private equity firms rely on ...

    How to Calculate Market Price Change of Common Stock

    Common stock prices fluctuate on a daily and even hourly basis. But as an investor, what matters most isn't the current price of the stock so much as the change in stock price. Obviously, you want your stocks to increase in value during the period that you hold them. Calculate ...

    What Is the Dow Jones Industrial Average That Is Posted Each Day When the Stock Market Closes?

    Every night, national news broadcasts discuss how the stock market performed by quoting the change in the Dow Jones Industrial Average. The Dow is a stock market index, tracking the value of a select group of stocks. It is the oldest and most widely followed of the U.S. stock ...

    How to Place Sell Limit Order for Stocks

    Besides the regular orders to buy or sell securities at the current market price, brokers allow investors and traders to use other order types to buy or sell when a security hits a pre-set price. A sell limit order can be used in the stock, options, futures or foreign exchange ...

    How to Meet a Margin Call

    Margin calls are a broker’s way of saying that your carefully crafted trade did not quite work out as you had planned. How much you need to post to your account depends on your brokerage firm. The Federal Reserve set the initial minimum margin requirement at 50 percent ...

    What Is a SMA Mutual Fund?

    Even if you know a lot about mutual funds, SMAs might not be in your vocabulary. Separately managed accounts put you in charge of everything so you can exercise control over your fund and avoid pooling your money with other investors. However, when the National Association of ...

    What Is a Mutual Fund in Which No Sales Charge Is Paid by the Individual Investor?

    The common name for mutual funds that have a sales charge is "load" funds. So a fund without a sales charge is a "no-load" fund. The universe of mutual funds is split about 50-50 between load and no-load funds. Investing in a no-load fund puts more of your ...

    Issues With Mutual Funds

    Mutual funds are professionally managed investments that hold a variety of assets like stocks and government and corporate bonds. Investing in mutual funds lets you earn returns based on the dozens of stocks and other assets a mutual fund owns without actually buying dozens of ...

    How Much Money to Save & Invest?

    Saving and investing money on a regular basis is a primary way to accumulate wealth. The amount of money you need to save and invest depends on your current financial situation and your future financial goals, such as how much you earn and your total expenses. Understanding how ...

    Types of Investors in the Stock Market

    Anyone can buy stocks on the stock exchange. Each person has individual reasons for buying a stock, and each person has a trading personality. Your trading personality depends on how much risk you can tolerate, what kind of research you are willing to do, where you think the ...

    How Option Trading Stocks Work

    Stock options are separately traded derivative securities that have values based on an underlying stock price. Options allow a trader to take a low-cost position for big profits if a stock moves in the right direction. A new trader needs to learn a lot of jargon and trading ...

    How Stock Splits Affect Call Options

    Call options give you the right to buy a stock at a certain share price. If the stock splits and the share price drops, that could be detrimental to the value of your option contracts. To adjust for the effects of the stock split, your options position will also be changed.

    U.S. Treasury Bonds Vs. CDs

    U.S. Treasury bonds and certificates of deposit are considered low-risk, low-return investments. Investors choose these assets to diversify their portfolios and receive guaranteed income. Investors with a low risk tolerance are typically attracted to Treasury bonds and CDs. ...

    Whole Life Insurance Vs. Bond Funds

    Whole life insurance is considered a type of cash value insurance because it contains a savings component that grows over time. A bond fund is essentially a mutual fund that invests solely in bonds. Whole life insurance and bond funds make sense for certain investors. ...

    Two Possible Reasons for an Increase in Stockholders' Equity

    Stockholders’ equity is a company’s net worth. It is the company’s remaining value if it sold all of its assets and paid all of its liabilities. Stockholders’ equity is listed on a company’s balance sheet, and investors use this vital information to ...

    Stock Investing Vs. Property Investing

    Stock markets have a tendency to plunge and housing bubbles are prone to pop. Neither stock investing nor property investing comes with guarantees, and there is a world of difference between these two asset classes. Both can potentially make your dreams of wealth come true, but ...

    How to Hedge With Stock Index Futures

    Investors have a number of available options that will allow them to mitigate their exposure to an adverse movement in their stock portfolios. One of the best ways to hedge a portfolio of stocks is to use an index future. Many large cap stocks move in tandem with an index when a ...

    No-Load Mutual Fund Guide

    Mutual funds collect money from many different investors, and then place that money under the control of a fund manager who purchases investments based on the objective of that fund. Some funds charge a percentage, or load, on money that you invest, that is used to pay a broker ...

    How to Measure Investment Turnover Ratio

    An investment turnover ratio measures how actively a fund is managed. A high turnover ratio means the manager is buying and selling stocks on a regular basis, while a low turnover means the fund holds its investments for a longer period of time. Though a high investment turnover ...

    What Is a 30-Day Yield on a Mutual Fund?

    When you look up the specifics of a bond mutual fund, you will find several different reported yields. Each type of yield is useful, but the 30-day Securities and Exchange Commission yield rule requires every fund to calculate this particular yield number the same way. Use the ...

    Stock Vs. Bond Returns

    Stocks and bonds are two major investment types that interest most investors. Generally, financial advisers recommend holding both types in a diversified portfolio. Investors may want to analyze historical returns of stocks and bonds when choosing the right mix for a portfolio. ...

    Government Saving Bonds Information

    Just as corporations do, the United States government issues savings bonds to raise funds. Investors favor savings bonds because they are considered one of the safest investments available. According to the Securities and Exchange Commission, as of 2012 the federal government ...

    ETF Vs. Closed-End Fund

    Investors interested in diversifying their assets can choose to invest in an exchange-traded fund or a closed-end fund. Both investments offer investors the ability to diversify their holdings in a less expensive way than buying assets individually, but differences exist between ...

    NYSE Stock Market 500 Point Drop Rules

    The New York Stock Exchange in 1988 instituted a rule providing for a trading halt because of extraordinary market volatility. The so-called “circuit breaker” rule is intended to curb stock market panics by forcing a pause in trading so investors have time to digest ...

    How to Invest in Tax-Free Bond Funds

    One of the big advantages of investing in municipal bonds is their tax-free interest, which can make a big difference if you are in a high income tax bracket. You can buy individual municipal bonds, or you can spread out your risk by investing in a tax-free bond fund. Tax-free ...

    Building Good Mutual Fund Portfolio

    When you want to diversify your investments, mutual funds can seem like a good choice. These funds invest in a wide variety of investments, and this protects you somewhat. If one investment goes down, others in the fund might hold up. However, because funds diversify, buying ...

    Mutual Fund Selection Criteria

    Mutual funds come in all shapes and sizes, and the choices might seem overwhelming at times. Choosing a mutual fund is a personal decision you should make in accordance with your investment strategy. Establishing selection criteria for choosing mutual funds will help you find ...

    Reasons to Sell a Mutual Fund

    Although mutual funds have many advantages, reasons arise that make selling one the best option. Although hopping in and out of a mutual fund is not a recommended strategy, understanding the reasons to sell can save you money and time.

    What Does Yield Represent in a Mutual Fund?

    When you invest in a mutual fund, you want to make money. You can make that money as either income or growth. Growth means the value of your mutual fund shares goes up. Income means you get paid dividends or interest on your investment. "Yield" refers to your dividends ...

    How Is the Yield Calculated in Mutual Funds Returns?

    The return results from a mutual fund can be confusing compared to a fixed-income investment on which you know in advance the yield you will earn. The total return you receive from a mutual fund includes gains from several sources including the dividend yield. View the results ...

    Buying Stocks With Dividends

    One of the most disheartening aspects of owning stock in companies that do not pay dividends to investors is that to reap any spendable income from the stock you must sell it. While you may have picked a winning stock, all the profits are locked inside the asset. The beauty of ...

    What Kind of Investments Will Yield Me a Return for Retirement?

    The bursting of the real estate bubble in 2008 caused a severe ripple effect on the economy that systematically pushed interest rates on bank accounts below 1 percent. Gone are the days when retirees could simply open a bank account and earn 5 percent or more interest risk-free ...

    How to Average Down Stocks

    An old Wall Street story tells of the time the legendary financier, J.P. Morgan, was asked what the market would do. His answer was "It will fluctuate." You may have discovered this with your own investments. If you bought a stock that has since declined, you have ...

    How to Evaluate Bond Funds

    Not all mutual funds that specialize in bond investments are the same, so it pays to approach investing in a bond fund the same way you do research on stock investments. The primary difference in bond mutual funds, aside from their portfolios, is the cost of buying into the fund ...

    Dow Jones Futures Contract Explained

    If you like to watch financial news in the morning, you will notice that there is always a discussion of the Dow Jones futures and what the futures prices are indicating for the stock market session. Besides being useful news fodder, the Dow Jones futures are derivative ...

    When Does a Double E Bond Mature?

    U.S. Series EE savings bonds are among the safest investments in existence. If held to maturity, they also provide a very competitive return. Savings bonds have a complex three-stage maturity structure covering a 30-year span. This requires that you pay close attention to how ...

    When Are Mutual Fund Prices Updated?

    A mutual fund is a collection of stocks, bonds and other investments, pooled into one account. That shares the risk and smoothes the fluctuations in value of the individual investments. A fund's price or value is established by the worth of each share of the total assets, called ...

    How Does a Front Load Commission Work on Mutual Funds?

    Load funds are mutual funds sold by brokers and investment advisers. You pay a sales charge, or "load," to invest, and the broker's company is compensated out of the load amount. A mutual fund might offer different classes of shares that apply the load in different ...

    Bond Yields Vs. Stock Yields

    In the world of investments, "yield" means a stream of income -- the money you earn while holding stock shares or bonds. The market measures yield by percentage, somewhat like the interest rate you earn on your savings account down at the bank. But the nature of yield ...

    The Theory on Buying Stocks on the First Day of the Month

    Buying stocks on the first day of the month was the hot trading tip for 2010. That year, the S&P 500 made more than 90 percent of its gains during the 12 days that represented the first trading day of each month. However, this is probably not a trend you can count on to make ...

    What Measures Were Put in Place to Prevent the Stock Market Crash From Happening Again?

    Following the 1929 stock market crash, investors and financial community professionals began to fear a repeat performance, and that fear threatened to materialize in October 2008, when the market began an extended slide and flirted with disaster. Economists and regulators have ...

    How to Buy Stocks With Limit Orders

    The basic order to buy or sell stocks is called a market order. You tell your broker -- or enter the order online -- how many shares of which stock you want and the order is filled at the current market price. The use of limit orders allows you to control the price you pay to ...

    IPO Shares & Mutual Funds Basics

    Companies list their shares to trade in the public markets for the first time in an initial public offering, or IPO. In doing so, they offer investors an opportunity to share in company profits but also expose investors to the risk of financial loss. Mutual funds are investment ...

    How Do I Identify a No-Load Mutual Fund?

    A mutual fund pools money from a number of investors and uses that money to purchase a variety of securities. Each investor then owns a pro rata share of each security in the fund. Mutual funds are commonly divided into two categories; loaded funds and no-load funds. A load is a ...

    Explain Dividend Yield

    With fixed-income investments such as certificates of deposit, you know exactly how much interest you will earn, based on the yield. With dividend-paying investments, yield is a much more flexible concept. The yield on your stock or mutual fund might be different today than it ...

    Types of Stocks & Their Value

    Regardless of your financial goals, you can usually find a stock type in line with your investment strategy. Types of stocks and their values depend on the company that issues the stocks. Some companies offer stable earnings all year, and other companies see an increase in value ...

    The Average Mutual Fund Fees

    The expense ratio of a mutual fund shows the percent of the fund's portfolio value that the management company takes to pay expenses for portfolio management and administration. Every fund publishes its expenses, which allows an investor to directly compare the fees of different ...

    How do I Calculate ROI on Mutual Funds?

    Return on investment measures the increase in the amount you put into a mutual fund as a percentage of the investment. Reporting the return as a percentage controls for the size of the investment, so a $100 investment that earns $50 will have a higher ROI than a $1,000 ...

    Key Points on How to Invest in Stocks

    Your first steps into serious stock investing can be confusing and alarming. There are thousands of stocks from which to choose, divided into groupings that seem vaguely defined, such as growth stocks, income stocks, penny stocks and blue chips. You can follow the advice of TV ...

    Individual Bonds vs. Bond Funds

    Experts are divided on whether it is better for an investor to buy individual bonds or bond mutual funds. One side of the argument states that mutual funds provide professional managers who have the experience to weather changing markets and provide higher returns. The other ...

    How Do I Figure Gain & Loss From a Stock Portfolio?

    When you own several stocks, it's easy to confuse your winners and losers and lose track of how you're doing with your investments. With a simple system, you can watch your portfoliio, make informed buying and selling decisions and calculate the gains and losses not only for ...

    Key Factors on Buying or Selling Stocks

    It is difficult to accumulate enough money to invest in the stock market, but when you do, you are faced with another difficulty -- deciding which stocks to buy. And once you own stocks, you have another difficult decision: when to sell them. Nobody knows for sure when to buy ...

    What Percentage of a Portfolio Should Be in Small to Mid Cap Stocks?

    When you want to diversify your portfolio, you must consider many different classes of investments. One of those classes is mid-cap stocks. These stocks tend to behave differently than other investments. They can be volatile, and some mid-cap companies fail. But they also can ...

    What Factors Influence the Value of Preferred Stock?

    When it comes to investing, you can choose to be an owner or a loaner. Owners buy equity securities, such as stocks, while loaners buy debt instruments, such as bonds. If you are a meet-in-the-middle kind of investor, you might be interested in preferred stock. Preferred stock ...

    Formula for Calculating the Earnings Available for Common Stockholders

    A company's earnings available for common stockholders helps it determine its earnings per share, or EPS, one of the most commonly used measures of corporate profitability. Calculating earnings available for common stockholders isn't complicated; you simply subtract one number ...

    How Do Investors Know the Stock Market Will Be Up Before it Opens?

    It's not really accurate to say that investors "know" the market will be up when it opens. The stock market can always surprise and move opposite of expectations. However, the overnight news and the futures markets give some indications of the market direction as the ...

    What Is a Conservative Mutual Fund or Stock?

    Conservative investments are those that do not expose investors to an excessive amount of risk. Conservative mutual funds or stocks do not always deliver the highest profits, but they are unlikely to cause severe financial losses either. A conservative mutual fund is an ...

    Buying Stocks in a Bear Market

    A down market is called a "bear market" for good reason. A bear is a powerful, dangerous beast, and many a naive investor has been lured into a bear market by attractive low prices, only to have his finances shredded by the beast. Nevertheless, a bear market offers as ...

    REIT vs. Bonds

    Two common investment types in the secondary investment market include real estate investment trusts and bonds. REITs are financial securities back by real estate, and bonds are fixed-income securities issued by corporations, municipalities and the U.S. Treasury. REITs and bonds ...

    What Is the Meaning of Share Class B in Mutual Funds?

    Mutual funds can be a valuable addition to your investment portfolio, allowing you to diversify and gain broader exposure to the market. Mutual funds are divided into different classes based on how they meet various criteria, particularly how and when sales charges, or ...

    How Can I Go About Locating My Savings Bond Without Having the Actual Paper?

    If you have lost paper U.S. Saving Bonds due to fire, theft, flood or any other reason, you usually can obtain replacement bonds from the Treasury Department. That agency has searchable records of all outstanding paper savings bonds that it can use to replace your missing bonds. ...

    How to Create Monthly Income With Dividend Paying Stocks

    Gaining financial security is not just about earning a good living. It's about creating a steady stream of unearned income that keeps paying you even when you are not working for your money. Dividend stocks typically pay out on a quarterly basis. By investing in as few as three ...

    How to Start a 529 Plan

    Parents who want to get a jump start on saving for their child's college education may want to consider establishing a 529 plan. Named after Section 529 of the Internal Revenue Service Code, these plans offer a tax-advantaged alternative to other types of college savings ...

    How Much Do Saving Bonds Pay in Interest?

    Series EE savings bonds are an interest-bearing debt obligation of the United States. They are backed by the full faith and credit of the U.S., making them among the world’s safest investments. Initially, savings bonds appear to pay minuscule interest, but they can provide ...

    Are Tax Liens a Wise Investment in Arizona?

    Once a year, Arizona’s fourteen counties issue tax lien certificates on real estate with delinquent property taxes. These certificates are first liens that attach to raw land, single-family and multi-family homes, mobile homes, factories and other types of property. But ...

    What Is a Serial Bond?

    If the first thing that comes to mind when "serial bond" is mentioned is a string of 007 movies, it’s time to divert your mind from Ian Fleming’s hero to financial investments. Serial bonds mature in stages and are typically quoted by yield, not price. They ...

    How to Start Investing in Dividend Reinvestment Plans

    Many companies, especially those which pay regular dividends, offer dividend reinvestment plans, or DRIPs. These allow investors to use earned dividends to buy more shares of stock. Most DRIP plans allow you to set up regular, automatic investments to buy more shares, which will ...

    What Types of Preferred Stock Have Dividends in Arrears?

    The only type of preferred stock that has the potential for dividends in arrears is cumulative preferred stock. Having dividends in arrears is not positive for investors holding the shares. The good news is that the cumulative preferred investors are first in line if the company ...

    How do I Convert Stock Market Prices Into Returns?

    Looking at the stock market prices can tell you how much your investment is worth. However, if you don't have something to compare it to, such as the price you paid for the stock, you aren't able to calculate your return. Your return can be measured in dollars, which tells you ...

    How to Find Outstanding Shares After the Dividend

    Stock dividends give a company a way to increase the number of shares outstanding and bump up the number of shares owned by each shareholder. But dividends don't change the value of what each shareholder owns. The company is still worth the same amount, but it's just divided ...

    What are Diversified Mutual Funds?

    Mutual funds automatically provide some level of diversification to investors. This is because these investment vehicles direct capital to multiple equity or bond securities or a combination of both. Nonetheless, there are some mutual funds that invest broadly and provide more ...

    What Can You Invest Pretax?

    By investing money on a pretax basis, you can defer paying taxes on the money you invest and any investment gains it earns until you withdraw the funds. Most pretax plans are intended to allow you to save money for retirement and defer the taxes until you withdraw the money to ...

    The Effects That the Stock Market Has on Pension Funds

    Pension fund capital is devoted almost entirely to the financial markets. While pension fund managers generally direct the money across various asset classes and not only equities, the stock market is commonly used. As a result, performance in the stock market has the ability to ...

    How to Get a Past Stock Price

    Past stock prices are a useful tool for investors and market analysts because they provide an understanding of how a particular stock reacted during specific market events and can help you gauge future returns. You can use several free online and offline resources to look up a ...

    What Makes the Over-the-Counter Market Different From the NASDAQ or the New York Stock Exchange?

    The over-the-counter, or OTC, market differs from classic stock markets such as the New York Stock Exchange or NASDAQ, in two key areas. One is physical, since the OTC has no "place" or location as do, unlike the traditional stock markets. The second involves market ...

    Mutual Funds That Rise When Market Falls

    To identify mutual funds that typically rise in value when the stock market falls, it is useful to recognize asset classes that are uncorrelated to equities. Investment categories such as fixed income and commodities are two such asset classes. While there is no guarantee that ...

    What Are N Class Mutual Fund Shares?

    The use of mutual fund share classes occurs mostly with load funds, allowing financial advisers to sell from several different fee structures on a single fund. In the fund industry, the structures of class A, B and C shares is pretty universal. Further along in the alphabet, ...

    Explanation of How to Short Stocks

    Selling a stock short is a tactic to profit from a falling stock price. When you short, you sell shares that you do not own. You buy them back later, hopefully at a lower price. It might seem odd to sell something you do not own. But short selling is common for many types of ...

    How Many Stocks Should Be in a Portfolio?

    When you diversify your stock portfolio, the goal is to reduce risk and gain exposure to as many market segments as possible. This increases your chances of finding a winning segment while protecting yourself from any declines. Your other holdings may make up for the declining ...

    Hedge Fund vs. Proprietary Trading

    The investment management business focuses on generating returns for investors by designing strategies that make clients money. The hedge fund industry has flourished since the early 1970s, generating an entire support industry that specializes in investment management. The ...

    How to Liquidate Stocks

    There are two kinds of stock portfolio liquidation: small portfolio and large portfolio. You can place orders with your stockbroker to sell each individual position if you are liquidating a small portfolio of stocks. Liquidating a large portfolio or holdings of significant ...

    How to Compute the 52-Week Average Selling Price of a Stock

    Most stocks have prices that fluctuate daily as a result of supply and demand, market psychological effect and individual investor needs. As such, looking at a stock's closing price on just one day does not give an accurate view of the stock's price movement for investment ...

    The Advantages of Large Mutual Fund Firms

    A mutual fund that starts out very small in terms of the dollar value of its holdings can grow to be large over the years as investors put in more money and stocks grow in value. The Wall Street Journal lists the 25 biggest funds as ranging from $37 billion to $170 billion in ...

    Tax Lien Investing Basics

    After the 2008 financial industry collapse, many homeowners fell behind on paying property taxes. In order to collect the lost revenue, some states allow taxing authorizes to sell off the property tax liens — essentially the right to collect the back taxes — to ...

    Difference Between ETF & Traditional Mutual Fund

    Investors seeking diversification and low volatility invest in exchange-traded funds and traditional mutual funds. Although both investments buy and hold a variety of assets, they each have different management styles, fees and trading processes. Making an informed investment ...

    Stock Market Vs. Commodity Market

    In many ways, the stock market and commodity market are linked. In theory, the stock market rises and falls based on the reported earnings and projected earnings of the companies with stock trading on an index. When business slows, or the cost of producing products rises, ...

    How to Invest in Natural Gas Stocks

    Stock markets can be daunting -- the bells, the rush, the frenetic traders. Then there's the unbridled hope among investors hoping to retire on savvy investment picks, along with the threat of financial ruin. As epicenters of change and arbiters of trends, stock markets echo ...

    Are Mutual Fund Returns Net of Fees?

    When you purchase shares in a mutual fund, you buy an investment advisory service, according to Forbes. The fund's investment managers make buying decisions for you, placing your money in whatever investment the mutual fund specializes in. You pay for that expertise. If you pay ...

    How to Sell Stock on Limit Price Orders

    When buying or selling stock, you often pay or receive the price that shares are trading at when the trade is executed. This isn't always ideal, especially if prices are fluctuating. However, taking advantage of other trading options can help. For example, limit orders let you ...

    Approaching Ex-dividend Stocks

    Investment or trading strategies revolving around stocks going ex-dividend offer the potential to improve or lock in gains from high-dividend stocks. Although there is no magic formula to profit from ex-dividend stocks, an understanding of the process and some price history ...

    How do I Calculate Interest on EE Savings Bonds?

    Series E savings bonds were first sold in 1935 as a way for the U.S. Department of the Treasury to raise money to fund government operations. In return, savings bonds were a safe investment with an interest rate usually higher than what bank checking or savings accounts offered. ...

    How to Invest in Dow Jones Select Dividend Index Fund

    The Dow Jones Select Dividend Index Fund is an exchange traded fund -- ETF -- which invests to match the results of the Dow Jones U.S. Select Dividend Index. For the index, the Dow Jones Company chooses 100 stocks based on dividend yield, dividend growth rate, payout ratio and ...

    Debt Financing Vs. Share Financing

    Businesses seeking funding through investors typically consider two options: debt financing and share financing. Debt financing involves borrowing money from investors by issuing corporate bonds. Share financing involves selling ownership rights in the company to investors by ...

    Mutual Funds Containing Corporate Bonds

    There are three major types of bonds: government bonds, municipal bonds and corporate bonds. Each type has its own features, benefits and disadvantages. Bond mutual funds also come in the same categories as the bond types they can own. The major attraction of corporate bonds ...

    Do Stocks Drop After the Dividend Pay Outs?

    The price of a stock does decline when the dividend becomes payable to investors owning shares. However, there are several dates involved with every dividend payment, and the date of the price drop and the actual payment date may be weeks apart. The concept of ex-dividend ...

    How to Buy Pink Sheet Stocks

    Over-the-counter stock quotes, called “pink sheets” because of the color of the paper they used to be printed on, are today published electronically by OTC Markets Group Inc. This private company is not an authorized broker-dealer and is not registered with the U.S. ...

    How do I Place a Limit Order on a Covered Call in Stocks?

    A covered call trade involves buying shares of a stock and at the same time selling call options against those shares. To maximize the profit potential of the trade, you want to pay the lowest possible amount for the shares and get the best price for the call options. However, ...

    How to Calculate the Return on an Option

    Options give you the right but not the obligation to buy or sell a financial asset at a predetermined price and specific date. "Call" options allow you to buy, while "put" options allow you to sell. The underlying asset can be practically anything, but ...

    How to Open a Demo Trading Account

    There's every chance you could be an investor par excellence or the next Warren Buffett, but it would be wise to test your trading skills before you start risking your own money. If you've always fancied playing the stock exchange or foreign exchange markets, signing up for a ...

    Seven Ways to Analyze Stock

    Investors depend on stock analysis to find potentially profitable stocks. Common ways to analyze stock include technical and fundamental analysis. Several components fall under fundamental analysis, including examination of a company’s price-to-earnings ratio, earnings per ...

    Mutual Funds Risk Vs. Reward

    Many investors use mutual funds to capitalize on diversification and professional management and to save for retirement. A mutual fund collects money from different investors and purchases a variety of assets with the collective money. As with most investments, mutual funds ...

    How to Open an Account to Futures Trade

    Opening an account is the first step to trading gold, crude oil and corn futures. There are many futures trading firms out there and it is important to select the one that is right for you. Carefully screening a select few ensures that the firm you pick will meet your trading ...

    Why Bonds Give Lower Returns Than Stocks

    Bonds offer lower returns on your investment for one simple reason: They are considered safer. Bonds have a regular schedule of fixed payments, so you know exactly how much money you will be paid and when. The risk is the creditworthiness of the entity issuing the bond. Stocks, ...

    Should I Reinvest Dividends & Capital Gains From a Mutual Fund?

    Most investors choose to reinvest mutual fund capital gains and dividends. "The Wall Street Journal" reported that in 2011, more than 85 percent of dividends earned on long-term mutual fund investments were reinvested. Reinvestment provides several benefits, but there ...

    How Does the Fed Affect Stock & Bond Mutual Funds?

    The U.S. Federal Reserve has a statutory mandate to maintain stable prices, maximum employment and moderate long-term interest rates. Fed monetary policy is how the Federal Reserve Board of Governors achieves this mandate, employing strategic monetary tactics through Fed open ...

    Relationship Between Earnings & Stock Market Value

    The relationship between a company's earnings and its stock price can be complicated. High profits don't necessarily mean a high stock price, and big losses don't always lead to a low stock price. Of course, without earnings it is hard for companies to stay in business for long. ...

    Description of the American Stock Exchange

    The founders of what is now the American Stock Exchange would not recognize their creation. It has undergone many changes since it began with traders buying and selling stocks on the curb outside the New York Stock Exchange on New York City's Wall Street. It grew to be a smaller ...

    Does the Dow Jones Industrial Average Include Dividends?

    The Dow Jones Industrial Average is the oldest and most widely followed stock market index. The DJIA tracks the share price changes of 30 major U.S. companies. Changes in the index over time do not include any dividends paid by the 30 DJIA companies. However, total return data ...

    What Is Dow Jones Corporate Bond Index?

    The Dow Jones Corporate Bond Index is a "basket" or group of bonds that provide investors a way to study these particular investments. Unlike stocks, which give ownership in a company, bonds represent a promise to repay borrowed money, usually with interest. The ...

    How do I Invest in a 529 Plan?

    A qualified tuition plan, commonly called a 529 after the section of the Internal Revenue Service code which authorizes it, is a simple and flexible way to put money aside for future tuition. All you really need to start a 529 savings plan is a beneficiary, someone who in the ...

    What Does Total Stockholders Equity Represent?

    Stockholders’ equity can be found on a corporation’s balance sheet. Total stockholders’ equity represents the company’s remaining value after liabilities are subtracted from assets. Stockholders’ equity is comprised of several components, including ...

    Ethical Mutual Funds

    When Antonella Basso and Stefania Funari of the Ca Foscari University in Venice, Italy, wrote their treatise “Measuring the Performance of Ethical Mutual Funds,” the topic made its way to the archives of the Social Science Research Network. Investing and the social ...

    How to Trade Low Volatility Stocks

    Many people firmly believe that the higher the risk taken in investments, the greater the reward. In a 2012 study, economists Nardin L. Baker and Robert A. Haugen showed that low risk, low volatility stocks provided greater returns over time than did high volatility stocks. They ...

    Asset Turnover Ratio on Mutual Fund Investments

    A mutual fund's turnover ratio is the rate at which its holdings “turn over," which is an indication of the fund's buying and selling activity. For example, a turnover ratio of 300 percent means the fund manager has replaced all securities in a fund's portfolio three ...

    Three Factors That Affect the Market Value of a Stock

    When you buy a stock you're no doubt hopeing to turn it into a profitable investment by watching its market value rise. The problem is, you're buying the stock from another investor who probably expects the stock price to drop. Nobody has a crystal ball that reveals whether ...

    What Disadvantages Do Small Investors Face When Investing in the Stock Market?

    It's easier to be a small investor than ever before. With an Internet connection and a computer -- or even a smartphone -- you can research markets and stocks and manage your portfolio more efficiently than any 20th century investor. Small investors still face disadvantages, ...

    What Causes Stock Price Changes?

    The price of a share of stock at any given time is determined by supply and demand, or how many people are willing to buy or sell shares of that stock at any specific price point. As various factors influence investors to buy or sell the stock of a particular company, the price ...

    Does the Par Value Dictate the Asking Price for the Company's Stock?

    The par value of a company's stock -- if the stock even has a par value -- has next to no relationship to the asking price for that stock. Par value gets set when the company first incorporates, and the figure the company chooses is of interest primarily to its founders and ...

    How to Figure out the Earnings per Share on a Simple Income Statement

    Earnings per share (EPS) is a financial metric that measures the profitability of a company's stock on a per-share basis. EPS serves as an indicator of a company's performance and is useful for comparing the profitability of different companies' stock. Most companies include ...

    How to Buy Stock Right Before a Dividend Pays

    Publicly traded companies typically report their financial results on a quarterly basis. If a company has a profitable quarter, its board of directors might choose to pay out a portion of those profits to the company's stockholders in the form of a dividend. If you're ...

    How to Invest in a Stock Index Fund

    A stock index fund is a mutual fund that mimics the performance of the Standard and Poor 500 or a similar index. The fund manager simply buys the stocks that make up the chosen index and holds them. This eliminates the need for a research staff and cuts down on the fund's ...

    How to Find Investors for Senior Housing Projects

    According to Senior Housing News, there’s been a shortage of new construction in the senior housing market that mirrors the real estate construction slump that began to overtake the nation in 2007. But by the end of 2012, the picture was improving, says the National ...

    How to Analyze a Prospectus

    A prospectus provides important information about investing in financial securities. The Securities and Exchange Commission requires certain investment firms, such as mutual funds, to provide prospectuses to potential and current investors. Publicly traded companies that issue ...

    Balanced Fund Vs. Independent Stock and Bond Funds

    While independent stock and bond funds remain true to their asset classes and do not invest across investment categories, a balanced investment fund offers investors the best of both worlds and invests in both stocks and bonds. Although balanced funds offer investors more ...

    When Are Mutual Fund NAVs Updated?

    Mutual fund shares are not traded the way common stocks are. An investor buys or redeems a mutual fund share at its net asset value, its portion of the total worth of the fund. This will vary with the number of shares in the fund and the total worth of the securities or other ...

    How to Buy Stocks After They Close on Fridays

    In the U.S. major stock markets are open on weekdays between 9:30 a.m. and 4 p.m. It is possible, however, to buy and sell stocks outside these hours. In fact, you can trade practically 24/7. These trades occur on electronic trading networks, or ECNs. Trades that take place ...

    Do You Pay Interest on Margins Not Used in Stocks?

    You utilize margin when you borrow money from your broker to buy financial instruments such as stocks or bonds. Naturally, such loans carry an interest charge, which can amount to hefty sums if you borrow large amounts of money for lengthy periods. It is therefore crucial to ...

    Stock Market Trends for Alternative Energy Stocks

    Many of the companies behind alternative energy methods and technologies are small businesses that have yet to penetrate the mainstream. As a result, these investments tend to trade with extreme volatility. Alternative energy stocks often generate their highest returns when ...

    What Is the Penalty for Taking Money Out of a Mutual Fund?

    According to the U.S. Census bureau, as of 2010, there were 7,581 mutual funds in existence, with 4,585 of these being equity mutual funds. The value of these funds is over $11.8 trillion. When you sell shares in a mutual fund and withdraw the money, you may end up paying a ...

    Value Stock Vs. Growth Stock Risk

    Two groups of equities couldn't be more different than growth and value stocks. Value stocks are inexpensive, while growth stocks are priced at lofty levels. Investors have not given value stocks the credit they deserve, but they celebrate growth stocks with no guarantee of ...

    Diversification of Stocks

    Diversification is an important concept in stock investing. The common saying is to not put all of your eggs in one basket. Diversifying your assets allows you to stretch risks over various financial instruments. Diversification builds resistance against the volatility of the ...

    Do Bonds Produce a Monthly Income?

    The standard interest payment interval for investment bonds is twice a year or semi-annually. For investors who would like to receive monthly interest checks, there is one type of bond that is an exception to the rule and a couple of other paths to turn bond interest into ...

    How to Use a Savings Bond Calculator

    Savings bonds are sold at a discount, and the face amount on the bond denotes what it will eventually be worth. Many savings bond owners want an easy way to calculate and keep track of their bond’s earned interest. The U.S. Treasury Department has a free online calculator ...

    Common Stock Funds

    Common stock funds, often referred to as equity funds, are a type of mutual fund that invests primarily in common stock. Investors who desire attractive returns favor stock funds, because they are able to purchase the common stocks of a variety of companies. Stock funds vary in ...

    How to Buy Dow Jones Futures Options

    Futures contracts with values based on the Dow Jones Industrial Average stock index allow traders to make leveraged bets concerning the future of the DJIA. With regular futures trading, the leverage cuts both ways, so picking the wrong direction with a Dow futures trade can turn ...

    Schedule D Description

    If you sell stocks or other property, you must report the sale to the Internal Revenue Service, as well as if you experienced a capital gain, or made a profit on the sale. You will also want to report any capital losses to offset the gains and lessen your tax burden. Schedule D ...

    Negative Impacts of Alternative Investments

    Alternative investments are attractive options for investors who feel that traditional investments fail to meet all of their financial needs. Many investors buy alternative investments to reduce the overall volatility of their portfolio through diversification. Advantages of ...

    Are Treasury Bills Safer Than Mutual Funds?

    The term "mutual fund" encompasses a wide spectrum of financial assets. While some mutual funds are quite safe, some carry a substantial amount of risk. Treasury bills, on the other hand, are essentially the safest investment and carry, for all intents and purposes, ...

    When Should I Receive Profits if I Buy Stocks?

    Investing in stocks provides the opportunity for financial gains and profits, though there is no time frame or even a certainty that you will earn profits from an individual stock. The stock market as a whole has increased in value over the years, but those years include periods ...

    Why Don't Bonds and Stocks Move Together?

    Not only do stock and bond prices not move together, they most often move in opposite directions. This is because they are much different investments and usually attract very different buyers. Bonds are corporate borrowings, so their prices depend on the credit standing of the ...

    Are Corporate Bonds Sold on the Stock Market?

    Corporate bonds are a type of financial security. Other financial securities include stocks issued by corporations, unit trusts, options and mutual funds. All of these securities are sold on the stock market. The only requirement for companies to sell their bonds on the stock ...

    Stocks Vs. Commodities

    Investors take positions in stocks and commodities to earn an attractive return on their investment and balance their portfolios. Although stock and commodity investing are popular methods to earn money, the two asset classes differ greatly. Both investment types offer ...

    The Advantages and Disadvantages of Investing in the Stock Market With Personal Finances

    Risking personal money for a potential gain is a big step for some individuals. Investors willing to take the risk often use their personal finances to invest in the stock market. The stock market is an exchange place where investors meet to buy and sell shares. Historically, ...

    The Diversification of Mutual Funds

    Financial asset yields can rise rapidly only to fall precipitously. This is a harsh lesson for people who have staked their financial futures on the earnings of a handful of stocks or the price appreciation and interest payments of a few bonds. A diversified portfolio that is ...

    Basics of a Mutual Fund

    Investing in assets that increase in value is a common way to build wealth over time, but buying individual stocks can be risky. Mutual funds are professionally managed investments that collect money from investors and invest the money in a variety underlying assets, which can ...

    Can I Trade Equities in an IRA?

    It is possible to trade equities -- stocks -- in an IRA brokerage account; however, the IRA rules may restrict the types of trading you can employ compared to other kinds of brokerage accounts. To trade stocks in your IRA you must implement strategies that will not run afoul of ...

    Who Are the Major Investors in the Stock Market?

    Major stock market investors are generally institutions that trade on behalf of clients, including individuals, or retail investors. Institutions -- such as asset management firms -- have great scale in the stock market for large trades because they combine the assets of ...

    High Yield Bond Fund Vs. Stock Fund

    Investors are known to buy bonds to escape some of the volatility inherent in stocks in favor of the safety that fixed income securities provide. High-yield bonds, however, refute that theory, as these debt securities can introduce even more risk than stocks into an investment ...

    The Role of the Stock Exchange in the Economy

    You may be surprised to discover the number of stock markets blanketing the globe. Even a country not known for having a sophisticated economy, like Rwanda, relies on its stock exchange to help businesses raise capital and give investors opportunities to back new and established ...

    How to Invest in Euros ETF

    The availability of foreign-currency-tracking exchange-traded funds -- ETFs -- now make it unnecessary to open a commodity futures or currency broker account if you want to make a bet on currency exchange rates. The euro to U.S. dollar exchange rate -- EUR/USD -- is the most ...

    Does Stock Buyback Reduce Equity?

    Treasury stock represents common shares issued to the public but later repurchased by the issuing corporation. Buying back stock reduces a company's shareholder's equity. Treasury stock transactions appear on a company’s balance sheet, but they do not result in a gain or ...

    Different Kinds of Preferred Stocks

    Preferred stock lives up to its name because its owners have a greater claim to company assets than owners of common stock in the same company. This means they collect their fixed dividend payment first, and should the company go bankrupt, they have prior claim to any remaining ...

    How to Sell Stock After the Ex-Dividend Date

    Selling a stock after it goes ex-dividend allows you to collect the dividend and use the proceeds from the stock sale for other investments, such as another stock that will soon pay a dividend. Dividend capture -- as the strategy is sometimes called -- requires an understanding ...

    Index Fund Vs. ETF

    At first glance, index funds and exchange traded funds, or ETFs, seem like similar investments. Both are passively nmanaged, low-cost options for investors looking to easily diversify their assets. When you dig a little deeper, however, you'll notice distinct differences between ...

    How Do the Prices Change in the Stock Market?

    Stock prices, like the prices on any goods or services that are bought and sold, are set primarily based on the supply of the stock in the marketplace and investor demand for the stock. As Wall Street veterans say, when there are more buyers than sellers of a stock, its price ...

    Basic Vs. Diluted Earnings

    Basic earnings refers to an investor's entitlement to profits when holding one common stock in a profitable corporation. Diluted earnings includes the stock of stakeholders who own options, warrants and similar instruments that could be -- but have not been -- converted into ...

    Wind & Solar Mutual Funds

    Investors interested in fast-growing markets and socially responsible investing can satisfy both goals with alternative energy funds that focus on wind and solar companies. The returns on these funds have been inconsistent, with solar funds suffering more than wind-power ...

    Difference in Short Term & Long Term Capital Gains

    Capital assets refer to just about anything you own and use for personal or investment purposes, like stocks, your car or your house. When you sell the capital assets for more than you paid for them, you must pay taxes on the gain. Your gain could be classified as either a ...

    Difference Between Buy & Sell Stock Prices

    When you look up a stock price in the paper or on a financial website, you only get one price -- the last price at which the stock traded. When you start to buy and sell stock for yourself, you notice two prices -- a bid price and an ask price. Depending on several factors, the ...

    What Advantages Do Mutual Funds Offer Compared to Buying Particular Stocks?

    Mutual funds pool the money of many investors together to buy and sell stocks, bonds and other securities. Because an individual fund can invest across a broad range of companies and industries, they are popular with investors who don’t have the interest or time to ...

    The Basics of Mutual Fund Investments

    The primary feature of a mutual fund is the ability to invest in a company that owns shares of a multitude of other companies. Similar to most investments, mutual funds offer many benefits, but also come with risk. Understanding the basics of mutual fund investments is vital to ...

    Tips on Stock Portfolio Strategies

    Choosing a collection of investments is the first step in building a portfolio, but it is equally as important to develop an effective portfolio strategy. A portfolio strategy pulls all of your assets together in a way that offers you the highest returns while engaging in the ...

    Debt Vs. Equity Securities

    You know you should be saving and investing. Saving seems pretty simple. You just put some of your money in an interest-bearing account at the bank where you can get to it when you need it. Investing might seem a bit more daunting, because there are so many investment options to ...

    How to Read a Short Interest Ratio

    Investors use the short interest ratio to help decide whether to open a long or short stock position. The ratio is calculated by dividing the short interest -- the number of shares that have been sold short -- by the average daily trading volume. The short interest ratio puts a ...

    How Do I Figure a Stock Split?

    Stock splits are a way for corporations to make their shares more affordable and thus more attractive to individual investors. If you have shares in a company that splits its stock, you’ll end up with more shares. The worth of your investment hasn’t changed, because ...

    The Impact of the Dollar on Stock Prices

    A falling dollar is supposedly the best thing for your stock portfolio. The U.S. dollar and the stock market have a mostly one-way, inverse relationship. The majority of the impact flows from the dollar -- the cause -- to the stock market -- the effect. When the dollar rises, ...

    Advantages and Disadvantages of a Deferred Call Provision

    Bond issuers are sometimes motivated to retire a bond before its final maturity date. For instance, if interest rates decline, a bond issuer can save money by buying back existing bonds and issuing new ones at a lower interest rate. To facilitate bond retirement, issuers may ...

    529 Plan Options

    You have a lot of options if you want to start a 529 college savings plan for a child or other future student. Every state offers a 529 plan, and you can enroll in any of them. You aren't restricted to the program in the state where you live. A 529, named for the section of the ...

    What Is a 12b-1 Fee in a Mutual Fund?

    The annual expenses of a mutual fund may include a separately listed item labeled as 12b-1 fees. The odd name comes from a U.S. Securities and Exchange Commission rule, which allows mutual funds to charge investors the expenses covered under 12b-1 plans and also requires funds ...

    How to Avoid a Short Squeeze

    Unexpected upward jumps in a stock’s price can put the squeeze on a short seller’s trade. A squeeze happens when a trending stock suddenly makes a move in the opposite direction before resuming its original course. A short squeeze occurs when a stock makes a brief ...

    The Differences Between A Shares & C Shares in Mutual Funds

    Mutual fund investors must consider a variety of factors when choosing which fund to buy. Fund companies and fund strategies are vital, but one aspect of funds that can subtly affect profits is the fund share class. Many funds have different share classes that include different ...

    The Major Differences Between the S&P and the Dow Jones Industrial Average

    The Dow Jones Industrial Average and Standard & Poor's 500-Stock Index are both measures of stock price changes. Both are widely misinterpreted as reflecting the fluctuation of overall stock prices or "the market," although both monitor only a selected sample of ...

    The Use of a Sinking Fund for Preferred Stocks

    A preferred stock is a non-voting equity share issued by a corporation. It pays higher, fixed dividend yields relative to non-fixed common stock dividends, but usually provides lower yields than bonds issued by the same corporation. Preferred stock can be issued with a call ...

    What Financial Instruments to Buy When Stocks Fall?

    Investors turn to the stock market to achieve short-term profits or for help accomplishing long-term financial goals, such as retirement. When equities falter, it can reduce the value of an investment portfolio made up mostly of stocks. Luckily, there are other financial ...

    The Best Tax-Free Investments

    Investing is one of the best ways to accumulate wealth over the long term. In most cases, the federal government and some state governments take a portion of your investment earnings through income tax. To encourage investment activity, some investments are designed to lessen ...

    How to Buy Stock Shorts

    Short sellers look to sell stock shares they do not own with the intent of buying them back after the stock price has declined. The idea is to profit off of the decline in a stock's value. Short trading involves using your broker’s money to help pay for the trade, called ...

    Low Risk Investment Stocks

    When it comes to low-risk stocks, boring is often better. While low-risk stocks might not produce the highest returns, they typically offer some type of growth and are not nearly as volatile as other securities. Certain sectors of the economy are considered ...

    How to Organize a Financial Plan

    Developing a financial plan can help you stay within budget, achieve the standard of living you seek for your family and build a retirement fund. Even if you hire a financial planner to work out details of the plan, knowing how to organize a financial plan is something you can ...

    Active Vs. Passive Mutual Funds

    Stock selection is paramount in actively managed mutual funds. Active managers are responsible for not only building an investment portfolio that outperforms the broader markets but also changing the makeup of that fund to maintain above-average performance. Passively managed ...

    What Does a Stock Trading at 20X Earnings Mean?

    When investment analysts talk about a stock trading at X times earnings, they are making a comparison between the stock's market price and the issuing firm's profitability. The earnings multiple, also known as the P/E ratio, is perhaps the most frequently used benchmark for ...

    Dividend-to-Stock-Price Ratio

    When putting together a portfolio of stocks, the expected dividend income should be one of your key considerations. Dividends can provide a steady stream of cash flow and, especially when the stock market is going through a tough patch, make up for the lack of price appreciation ...

    Investment Strategies for People Close to Retirement

    When retirement is a long time in the future, many people invest their money as aggressively as possible. They choose growth stocks that have the biggest chance to gain value over the long term, even if they lose value in the short term. As retirement draws closer, however, your ...

    A Comparison of Class A & Class B Mutual Funds

    Broker sold mutual funds include fee schedules to pay a commission to the selling brokerage firms. These funds -- often called load funds -- may have different share classes with different fee structures. Class A and B shares are shares of the same fund with different costs and ...

    How to Buy Preferred Shares of Stock

    Investors can discover new profits by trading preferred stock. Common stock owners might see their dividend payments reduced and, in some cases, indefinitely suspended. Corporate bankruptcies can leave common stockholders stuck with worthless stock, while preferred stockholders ...

    Do I Have to Report Buying Stocks If I Did Not Make a Profit?

    Gains that results from buying and selling valuable assets, such as stocks, bonds and real estate are referred to as capital income. While you will only owe taxes when you actually register a profit, it is to your benefit to report losses as well to the Internal Revenue Service.

    Perpetual Vs. Nonperpetual Preferred Stock

    Corporations issue two kinds of stock: common and preferred shares. Although common shares are relatively uniform, preferred shares come in various flavors. While some preferred shares can exist indefinitely, others go out of existence after a while.

    Investment Expense Ratios

    The operation of a mutual fund involves costs, such as operating expenses, which are not directly related to investor transactions. The largest component of operating expenses is a fee paid to the mutual fund's manager. Other expenses include record-keeping, custodial services, ...

    The Minimum Stock Price for the NYSE

    The New York Stock Exchange is the oldest of America's major securities markets, established in 1792 and operated continuously since in New York City's Lower Manhattan. Its headquarters on Wall Street established that location as a synonym for the stock market and associated ...

    How to Invest in a Vanguard S&P 500 Fund

    The Vanguard S&P 500 Index Fund was the first index-tracking mutual fund when it was launched in 1976. The fund owns the same stocks in the same proportion as the S&P 500 stock index. The stocks in the index represent 75 percent of the value of the U.S. stock market, and ...

    How to Read Futures Charts

    Futures charts hold a wealth of information that investors can use to improve their trading. Prices rise and fall in response to changing supply and demand, and understanding how chart indicators respond to these price movements can mean the difference between a profit and a ...

    Is a Mutual Fund of Mixed Stocks and Bonds Good to Have?

    Two basics of investing are asset allocation and diversification, according to the Securities and Exchange Commission. In a nutshell, those two concepts sum up the financial advice your grandmother might give you: Don't put all your eggs in one basket, and make sure the eggs ...

    Is Now a Good Time to Invest in Index Mutual Funds?

    An index mutual fund invests in the stocks of a stock index, such as Standard and Poor's 500, the Russell 2000 or the Wilshire 5000. An index tracks the performance of a set of stocks index managers deem important indicators of the direction of the stock market. You can put your ...

    How to Buy Minimum/Small Amounts of Stock

    If you are buying large amounts of stock, paying $8 or $10 as a commission has little effect on your investment results. However, if you want to start small and build a stock portfolio, the lower the costs, the sooner you will start to make a profit on your investments. There ...

    The Average Mutual Fund Sales Charges

    The universe of mutual funds fits into the two broad classifications of load and no-load funds. No-load mutual funds do not have any sales charge to buy shares of a fund. With load-type funds, the sales charge is listed as a percentage included in the purchase price of fund ...

    Performance Analysis for a Stock Portfolio

    Whether you are a short- or long-term investor, understanding how to maintain your portfolio's performance can mean the difference between steady gains or dwindling value on your investment. Regularly analyzing your stocks allows you to locate and sell any investments that could ...

    How do I Squeeze Stocks?

    Short selling is when traders sell shares of stock hoping to buy them back for a profit when the stock price falls. But sometimes the stock price rises, and short sellers must buy the shares back at a higher price at a loss. Traders can squeeze stocks by buying shares at the ...

    What Is the Difference Between a Diversified & Non-Diversified Mutual Fund?

    Mutual funds usually shun the “eggs-in-one basket” approach of investing by placing clients’ money into different kinds of assets. Investors, ranging from pension fund administrators to private investors, choose diversified portfolios because they recognize ...

    How do I Calculate the Value of a $100 US Treasury Savings Bond From 1975?

    That $100 U.S. savings bond issued in 1975 is now worth a lot more than the $100 face value. The Treasury started issuing the current style Series EE savings bonds in 1980. The value of an older Series E bond can be found on the Treasury Department website. At this point, a 1975 ...

    How to Open a Mutual Fund Account Online

    Mutual funds are a good way to get your feet wet in the world of investing. You can find stock funds, bond funds and mixed funds. Because the funds include a group of securities, the degree of risk is less than investing in a single stock. Many banks and brokerages allow you to ...

    What Time Is NYSE Closing Bell?

    While there are round-the-clock supermarkets and 24-hour access to nearly every piece of information available on the Internet, some things still operate on a more traditional schedule. The New York Stock Exchange is one of them, and it limits its trades to banking hours. The ...

    Stock Market Monthly Trends

    While the stock market is in many ways unpredictable, it has been host to trends during it history. Some of these patterns repeat during certain months of the year and offer some explanation for otherwise unusual trading behaviors. Certain trends are welcome while others are ...

    American Stock Exchange Symbols

    The stock symbol dates to 1867, when the first ticker was introduced at the New York Stock Exchange. The ticker was a telegraph machine that recorded information on a thin paper strip, or tape. Thomas Edison refined the ticker in 1869, and that invention made him enough money to ...

    How to Buy a Veterans Family Fund Certificate of Deposit

    If you’re interested in buying a certificate of deposit that earns interest for you and also benefits veterans in need of financial help they can’t get from the Veteran’s Administration – and if you live in the state of Washington – put a ...

    Can Dividend Stocks Replace Bonds?

    If you are interested in investing for income, you have a number of options, including bonds and dividend-paying stocks. When prevailing interest rates fall, it is tempting to move your investments into dividend-paying stocks, which might offer a higher yield. While bonds and ...

    What Is the Relationship Between the Value of a Company's Stock & Its Stock Price?

    Investing would be much simpler if investors could take all of the information presented to them at face value. Unfortunately, however, there is usually more than meets the eye when it comes to investing, and stock prices are no exception. While a company's stock price is ...

    How to Find Mutual Fund Symbols

    A mutual fund is a select group of securities bundled together, given a name and then marketed as a publicly traded investment product per the requirements of the Securities and Exchange Commission. Mutual funds are named in order to easily identify the fund's goals and risks, ...

    CPI Vs. Stock Prices

    Around the middle of every month, the Bureau of Labor Statistics issues its Consumer Price Index, known commonly as the CPI. This is an index of prices consumers in urban areas are paying for a specific list, or market basket, of goods and services. The monthly announcement ...

    Settlement Date Vs. Purchase Date

    When you buy stocks through an online brokerage account, it appears that you place an order and a few seconds later you own the stocks. However, that is not entirely true. The settlement process for the stock market means that you will not officially own the stocks until three ...

    What Is a Market-Neutral Fund?

    Mutual funds come in many flavors. However, as long as the fund invests a significant portion of its cash in stocks, the fund's value will tend to take a hit when the broad stock market indices decline. A market-neutral fund attempts to avoid such a fate by employing advanced ...

    Value Vs. Growth for Mutual Funds

    Growth funds and value funds represent the two major investment strategies a mutual fund can adopt. Both approaches have unique strengths and weaknesses, and neither strategy is universally superior. Under specific market conditions value funds tend to perform better, while ...

    How to Purchase Oil Futures

    The New York Mercantile Exchange (NYMEX) is the major exchange for trading crude oil, unleaded gasoline and heating oil. Crude oil prices are closely watched by energy traders looking to profit from price fluctuations. Thanks to online trading, individual investors can open ...

    How to Trade Heating Oil Futures

    Savvy traders time their trades to take advantage of heating oil’s seasonal usage. Heating oil is primarily used to heat residences, and demand is highest in July, August and September as consumers prepare for the coming winter. By October, heating oil sales slow down and ...

    The Difference Between Preference & Ordinary Shares

    Stockholders' equity in a corporation consists of different types of stock shares and retained earnings. Retained earnings refer to the money earned and kept for future use by the company. Stock shares refer to ownership of the company by individual stockholders. Companies issue ...

    Where to Put Investments Before a Crash

    When unemployment reaches high levels and foreclosures are commonplace, it’s natural to worry about the economy and your investments. If most of your money is in the stock market and it crashes, you might not have time to wait for a possible recovery. Several options exist ...

    Similarities Between the American Stock Exchange & Nasdaq

    The American Stock Exchange and Nasdaq are both markets where investors can buy or sell stocks in companies. Both originated as alternatives to the older New York Stock Exchange, and from 1998 to 2004 they were jointly owned. Even under common ownership, however, they retained ...

    Are Fixed Income Bond Funds Insured?

    A fixed income bond fund is a portfolio of bonds in which investors own shares. The safety of a bond fund is dependent on the kinds of bonds the fund owns, but there is no insurance involved with the value of the fund shares. There are types of bonds that can be government ...

    What Are the Typical Fees Charged to Buy a Closed End Fund?

    Unlike mutual funds, which constantly buy and sell shares, closed-end funds sell shares just once with an initial public offering -- IPO. After the IPO, the shares of a closed-end fund trade on the stock exchanges like shares of stock or exchange traded funds -- ETFs. The market ...

    What Is a Reasonable Front End Load for a Small Cap Fund?

    Many investors believe smaller, lesser-known companies offer better opportunities to find market beating returns. Small cap mutual funds specialize in buying and owning shares of such companies. If you buy a small cap fund recommended by a broker, that fund will probably include ...

    Does Preferred Stock Have Claims on Corporate Earnings?

    Preferred stock is often described as a hybrid of bond and common stock, sharing features of both debt and equity securities. The claim that preferred shareholders have on company earnings is relative to the other types of securities and not an absolute claim that preferred ...

    Mutual Fund Share Class Comparison

    Because mutual funds pool the funds of many investors to purchase a wide range of securities, they can offer a way to provide diversification to your investment portfolio. You should, however, be aware of the costs involved before purchasing shares of any fund. Funds are divided ...

    How to Buy Stocks Pre-Market

    Trading opportunities don’t end just because the stock market closes. Investors can still trade news reports and company announcements using the electronic communications networks, or ECNs. Designed to match up after-hours buyers and sellers, pre-market trading has one ...

    Effective Duration Vs. Average Maturity

    Duration and maturity are key concepts that apply to bond investments. Effective duration and average maturity apply if you have a portfolio consisting of several bonds. While maturity refers to when a bond expires, or matures, duration is a measure of the bond's price ...

    How to Know the Ceiling and the Floor of Your Stocks

    Finding the floor and ceiling of a stock involves learning technical analysis of stock charts. Once you learn the basics of support and resistance, it is possible to guess whether the stock is trading at its floor or ceiling. Technical analysis attempts to identify at what point ...

    Different Types of Savings Bonds

    Grandparents, aunts, uncles and others have been gifting children with savings bonds for years. Savings bonds provide a safe investment for the bondholder while teaching him about the value of saving for his future. Some people purchase bonds to pay for a college education or to ...

    What Is Sharpe Ratio in Mutual Funds?

    When you evaluate a mutual fund, the first criteria you may review could be investment performance, or return. In addition to return, the volatility of the fund, or how much and how quickly the value of the fund rises and falls, is a good indicator of the potential risk that you ...

    Pros & Cons of Stocks Vs. Bonds

    Investors choose stocks in hopes of growing the original size of an investment as companies increase their profits. Stock prices are vulnerable, however, to changes in a company's financial health, the economy and broader stock market trends, all of which place investors at ...

    How to Trade Treasury Futures

    Treasury futures are one way traders can invest in treasury securities without risking large amounts of money. Treasury futures are derivatives of Treasury notes and bills, and they mirror the interest rate movements of the underlying securities. Treasury securities have ...

    What Causes Stocks to Increase or Decrease?

    The increase or decrease of a stock price is what causes investors to realize a profit or loss. The great thing about investing in stocks is the ability to profit when a stock price rises or declines. Stock prices increase and decrease based on investor supply and demand within ...

    How Do Hedge Fund Redemptions Affect the Stock Market?

    Hedge funds are investment pools for accredited investors -- wealthy investors with at least $1 million in net assets (excluding primary residences) or earnings of $200,000 in each of the last two years. Cash must come directly out of the fund when a hedge fund investor requests ...

    Purpose of a Trading Account

    When you buy stocks, bonds, mutual funds, exchange-traded funds and real estate investment trusts, you don't write a check from your checking account. In fact, you don't write a check at all. You can purchase securities quickly and efficiently with a trading account. This ...

    What Is Buying on Weakness with Stocks?

    Sometimes the stock market doesn't recognize the true value of a company's shares. When this happens, investors can attempt to take advantage of what appears to be a temporary setback, or decline in shares, and buy the stock on that weakness. If successful, the investor will ...

    Bond Funds Problems

    Bond funds are mutual funds that invest your money primarily in a variety of bond assets. Bonds funds are similar to other types of mutual funds, allowing you to easily diversify your investment holdings. Although bond funds offer many benefits, they also come with problems that ...

    How to Read Futures Prices

    In addition to some unique trading terms, the futures market also has pricing methods that are very different from stocks and bonds. Traders must to be able to read and understand futures price information to make informed investment decisions.

    SEC Yield Vs. Yield to Maturity

    When you buy bonds, you invest in a loan of money to a company or a government. The bond pays interest until the day it matures, when the loan money is returned, in full, to the party holding the bond. You can sell the bond in the meantime, or simply collect regular interest ...

    Does Investing in Stocks Provide a Monthly Income?

    Investing for income can leave you with no growth. CNN Money points out that stocks that pay high dividends may not sustain those payouts if they eat up company profits. This can cause the stock to drop in price. In such a scenario, your quest for income comes at the price of ...

    Mutual Funds Allocation Strategy

    Mutual funds invest in hundreds of securities. That means when you buy one share of a mutual fund, you own the investment instruments of several companies. In other words, your investment is already diversified. To make sure you don't end up owning the same securities in several ...

    How to Claim a Capital Loss on My Mutual Fund

    Mutual funds offer investors diversification and professional management. Unfortunately, they can also offer a rather complex calculation for tax purposes when you sell your fund shares for a loss (or a gain, for that matter). The key to the whole process is selecting the best ...

    How to Buy US Savings Bonds as Gifts

    U.S. savings bonds are a low-risk investment option that are issued by the United States Treasury. In the past, savings bonds could be purchased as paper certificates from local banks and were often given as gifts for birthdays, holidays and other special occasions. While it is ...

    How to Invest in Preparation for Inflation

    Investors pay attention to inflation because it directly affects their portfolios. The goal of an investor is to earn returns that keep pace with or surpass the inflation rate. Certain investments can help you prepare for inflation, such as inflation-indexed bonds and Treasury ...

    Do You Sell Stocks When They Hit a Resistance?

    When you look at a stock chart, you can spot resistance levels: previous highs in the stock chart. As the price approaches those highs once again, it may encounter a sell-off as investors decide it can't go any higher. However, resistance doesn't always mean the stock will go ...

    How to Reduce Investment Risk

    Your individual investments can typically be summed up in two words: "risk" and "reward." The general rule of thumb is the greater the potential reward, the greater the risk. But that rule doesn't always hold true in reverse order -- greater risk doesn't ...

    How to Invest in Health Care Pharmaceutical Stocks

    As the populations of some of the world's wealthiest countries continue to age, investing in the health care industry might prove to be a wise investment. However, because of the large number of companies in the industry, making an initial investment can be difficult. ...

    Details for the Interest Rate of Government Savings Bonds

    Savings bonds have been around since World War II and the current bond types, Series EE and Series I, have existed since 1980 and 1998, respectively. Although the U.S. Treasury has changed how rates are determined and calculated several times in the last 30 years, the current ...

    Moving Around in Dividend Stocks

    An alternative to a buy-and-hold strategy with dividend-paying stocks is to own these stocks for a short period and then buy other dividend stocks. The idea is to earn more than the four dividends per year typically paid by stocks. If the average stock you trade pays a 6 percent ...

    Where to Start When Choosing a 529 Plan

    A 529 plan offers choices for saving money against future college tuition. If you start early, you can save thousands of dollars for those expenses. With some options, you get a tax benefit, too. You have lots of choices with 529 college savings plans for a child or other ...

    What Are Some of the Common Bonds Available to Investors?

    It is not a difficult task for investors to buy bonds from the three major bond categories of government, municipal and corporate bonds. Some bonds can be purchased on your own or through a discount stock broker. With other types of bonds, a "live" investment broker ...

    The Advantages of Investing in Technology Stocks

    Technology companies have left an indelible mark on the stock markets over the last couple of decades. From the Internet rise of the 1990s to the rapid adoption of 21st Century technologies such as digital entertainment and cloud computing, the tech sector continues to evolve ...

    Stock Market Margin Requirements

    Buying stock for cash is a straightforward matter: Deposit money in a brokerage account, place an order, and your broker executes the trade. When you want to borrow money to make a trade, it’s called a margin transaction and is more complicated. Margin transactions must ...

    How Many Stocks Are in Dow Jones Industrial Average?

    While most of the major stock indexes track hundreds or thousands of different stock prices, the popular Dow Jones industrial average includes just 30 stocks in the index calculation. The Dow Jones Company makes every effort to ensure these 30 stocks reflect the U.S. economy and ...

    Options to Purchase Stock Equity Investments

    The easiest way to establish an equity position in a company is to buy its common shares. But there are alternatives – instruments or contracts known as derivatives can be bought or sold and then converted into stock. Equity options – puts and calls – are ...

    The Advantages of a Dividend Compared to a Stock Buyback

    The capital structure of a corporation is made up of the various forms of debt and equity it maintains. The equity portion consists of issued securities – common shares, preferred shares and warrants – and retained earnings, which are the accumulated profits of the ...

    Public Vs. Private Placement in Financial Equity

    Companies raise funding by issuing debt or equity. Stock is equity representing an ownership share in a company. Nonpublic companies can issue restricted private shares if they observe the procedures specified in the Securities and Exchange Commission’s Regulation D. ...

    The Risk of a Single Stock Portfolio

    Investing in stocks is a risky proposition, even if you hold a variety of stocks in various industries. But putting all of your investment resources into a single stock is far riskier, as the value of a single share will tend to swing far more wildly than the values of stock in ...

    Taking Dividends From Stocks

    As a company's earnings grow, its investors may benefit from a shareholder yield, which boosts the value of an original investment. For example, a company may issue a cash dividend directly to investors or reinvest dividends that investors would otherwise receive in cash. As a ...

    Do Dividends Change With Earnings?

    Dividends have a lot to do with expectations. If a company has been making distributions for decades, investors come to depend on them and may even be invested for the income that dividend stocks provide. Nonetheless, without earnings, companies have nothing from which to reward ...

    Can You Calculate Earnings Per Share Without Knowing Preferred Dividends?

    Earnings per share, or EPS, is one of the most important metrics used in stock valuation. EPS tells you how much the company earned per common share and measures the firm's efficiency in managing the funds entrusted to it by shareholders. Since EPS is calculated for common ...

    What Does the Amount Number Mean Next to the Ask & Bid Price of Stocks?

    At any given point, a stock, bond, option or any other financial instrument that is actively traded will have a bid and ask price. These figures refer to how much you must pay to purchase the asset and how much money you would make if you sold the asset. In addition, you will ...

    How to Find Dividend Yield

    Dividends are cash payments to shareholders of a company and constitute an important source of income for investors. Dividend yield is a key metric that allows investors to compare stocks, trading at vastly different prices, in terms of their dividend generation capability. ...

    How to Figure Percent Loss on Stocks

    Occasionally the market turns against you and you lose money on a stock investment. When you sell a stock for a loss, it is important to find out the amount you lost as a percentage of your initial investment, not just the dollar amount. This helps you put the size of your loss ...

    How to Transfer Stock Between Brokerage Accounts

    If you have more than one brokerage account, you can transfer assets between brokers. While you may consolidate all assets in one account at a single broker, you may also elect to keep some stocks, bonds or other financial assets at the first broker, to keep both accounts open. ...

    Mutual Fund B Vs. C Shares

    Mutual funds are a portfolio of assets, such as stocks and bonds, selected by an investment manager using proceeds from investor contributions. Mutual funds are attractive to many investors because they are managed by an expert (unless they are index funds) and they provide ...

    How Stock Options Dilute

    An option gives you the right, but not the obligation, to purchase shares at a specific price, on a future date. While options can change hands between independent investors, publicly traded corporations also issue options to their employees as a form of compensation. It is this ...

    IRS, Taxes and Buying & Selling Stocks

    Your stocks are a capital asset, along with just about everything else you own. If you sell your stock for a profit, the Internal Revenue Service wants its cut in the form of a capital gains tax. Unlike most of your other personal property, if you sell your stock for a loss, you ...

    Hard Call Vs. Soft Call Protection

    When you buy a bond, the purchase is fueled by the attractive yield it pays. If interest rates drop, you want to keep the bond and keep earning the yield for as long as possible. The issuer, on the other hand, would be happy to redeem the bond and issue new bonds at a lower ...

    Is There a Margin Call on Gold Options?

    Gold options are financial securities that give the buyer of the option the right but not the obligation to purchase gold on a future date. The most liquid types of gold options are options on futures and options on exchange-traded funds. Gold options are traded with the use of ...

    How to Figure Out the Maturity Date on a US Savings Bond?

    When the U.S. government – under President Franklin D. Roosevelt’s directive – issued the nation’s first “baby bonds” in 1935, the new financial product served two purposes: bonds gave ordinary citizens an opportunity to do their part for the ...

    How Do Bond Fund Yields Change With Interest Rates?

    A normal, or “straight,” bond periodically pays interest and then returns the original investment on the maturity date. A straight bond’s coupon, or interest, payments are fixed. At issuance, the bond is priced so its yield -- the annual income divided by the ...

    The Disadvantages of Bond Funds

    A bond fund is a mutual fund that collects money from investors and uses those funds to buy corporate or government bonds. Bond funds differ from money market funds in that bond fund managers tend to pursue strategies aimed at producing higher yields, and bond funds may purchase ...

    How to Trade Spot Gold

    Spot gold trading is simply buying or selling gold at the live price. There are no market makers or brokers in spot gold trading. The spot gold market is an online platform where buyers and sellers trade directly with each other. Spot gold traders can buy or sell fractional ...

    Cycles of the Stock Market

    Stocks go through robust periods where it seems that there is no end in sight to market gains, only to be blindsided years later by a similarly extreme market performance to the downside. For the long-term investor, market cycles represent seasons to enjoy profits, suffer losses ...

    Role of the Custodian of a Mutual Fund

    Whether you are a passionate or occasional investor, you have probably considered mutual funds for your portfolio. You have heard the term "custodian," but may be a bit fuzzy as to its role. Federal regulations mandate that an investment adviser, the fund manager and ...

    Buying on Margin Vs. Selling Puts

    One of the primary truths about the stock market is that stock prices will fluctuate. The challenge is trying to determine whether that fluctuation will move prices higher or lower. If you believe the market price of a particular stock will rise and you have enough risk capital ...

    Value Cost Averaging Vs. Dollar Cost Averaging

    Investors face a bit of a challenge in finding an investment strategy that aligns with their investment goals and level of risk tolerance. Two types of investment strategies used by investors include value cost averaging and dollar cost averaging. The characteristics of the two ...

    Do Bond Funds Lose Money When Interest Rates Go Up?

    Bond prices, while typically less volatile than stock prices, can still fluctuate in the secondary market based on changes in the issuer's credit rating and movements in prevailing interest rates. The price of bonds in the secondary market tends to drop when interest rates rise. ...

    Long Vs. Short Stocks

    In the jargon of stock market investing, the terms long and short indicate the type of position an investor has in a particular stock. Investors who buy and own stock shares are "long" those shares. A "short" position involves selling shares a trader does not ...

    How to Compute the Yearly Stock Market Percentage Gain or Loss

    Figuring the annual gain or loss on your stock portfolio helps you evaluate your investment choices for the year, as well as deciding how to position yourself better for the coming year. Measuring the gain or loss as a percentage allows you to compare investments of varying ...

    Who Governs the Stock Exchange?

    Stock exchanges have existed for hundreds of years, and for most of that time each exchange was self-governing and restricted to a single city or even a single building. More recently, a number of historic stock exchanges have consolidated into larger companies, creating ...

    Mutual Fund Fees Explained

    An investor builds wealth in part by achieving a reasonable rate of return on monies invested and reinvesting those earnings to generate additional income. But regardless of the success of a mutual fund in generating gross returns or the steady compounding of earnings, the ...

    What Is a Deferred Load on a Mutual Fund ?

    Investors in deferred load mutual funds pay sales commissions when they sell fund shares rather than when they buy shares. In some cases, the deferred load declines as the holding period increases. As a result, the fund effectively becomes a no-load fund if the investor holds ...

    How to Calculate Payback Period for a Treasury Bond

    The payback period for a treasury bond equals the amount of time it will take to earn interest equal to the price of the bond. Since treasury bonds can be bought and sold, the price that you paid might not be the same as the face value on the bond. The face value, or amount ...

    What Is the Intrinsic Value of a Stock?

    An investor considering buying a particular stock will probably have some idea in his head of what that stock is "really" worth -- what the financial world refers to as "intrinsic value." The intrinsic value of a stock is its actual value as a share of ...

    How to Research Solar Energy Stocks

    When investor David Zanoni was asked about solar energy stocks by Seeking Alpha website editors, he admitted feeling conflicted, citing a 75 percent drop in the value of solar energy stocks across the board in 2011. Was it an anomaly or a predictor of doom? That depends upon ...

    How to Read Stock Option Tables

    Traders can purchase one stock option to control 100 shares of stock for a small investment. Buying a call option gives you the right, but not the obligation, to purchase 100 shares of stock. Conversely, buying a put option gives you the right, but not the obligation, to sell ...

    How to Determine the Percentage of Bonds in a Portfolio

    A well-diversified investment portfolio contains a broad mix of both equity and debt securities. Your investments might include common stocks of large, medium and small cap companies, taxable and tax-exempt bonds, and a percentage of your assets should be in cash or cash ...

    How to Track NASDAQ 100 Futures

    For traders and investors, the NASDAQ 100 offers one of the more useful vital signs to gauge the general direction of the stock market. This index includes 100 of the most valuable non-financial companies on the NASDAQ exchange, an electronic trading platform. Tracking the ...

    What Are Speculators in the Stock Market?

    Investing in the stock market is a common method of building wealth, but not everyone who buys stocks invests for the long term. “Speculation” describes an attempt to anticipate how stock prices will change to inform stock trades and make profit. Stock market ...

    Unit Trust Vs. ETF

    Of the different types of investment company products available to investors, unit trusts and exchange traded funds -- ETFs -- are at the opposite end of the spectrum. The different types of investment companies -- also including mutual funds and closed-end funds -- are all ...

    Mutual Fund Disclosure Requirements

    A mutual fund is a pooled investment in which a fund manager purchases assets such as stocks and bonds using money deposited by individual and institutional investors. There are thousands of mutual funds out there from which to choose -- how do you make a selection? The ...

    How to Analyze Mutual Funds

    When using mutual funds as an investment vehicle to build your net worth, it is important that you are able to review and analyze your mutual fund choices correctly to minimize risk and maximize your potential investment gains. Choosing a fund that performs better consistently ...

    Mutual Funds Description

    A mutual fund combines money from many investors into a pool to buy stocks, bonds and other assets. This provides each investor with a share of a diversified portfolio, which reduces the risk of price fluctuations in any one asset. Funds are put together by companies called ...

    How do I Sell Covered Call Options?

    The covered call options strategy is viewed as one of the most conservative ways to use options. Successful covered call trading will generate an attractive level of income for your stock brokerage account. Covered call trades are sometimes referred to as buy/write trade options ...

    How to Trade the Stock Gap

    Stock gaps generally occur in response to news events or company announcements made after the markets have closed. The stock’s upward or downward jump could indicate a trading opportunity. But sometimes a stock price will make an unexpected gap just because it can. ...

    Why Raise Equity on the Stock Exchange?

    Companies need money in order to operate. They need to buy things, pay bills, hire workers, pay taxes, etc. A startup company is usually small and is funded by a mix of savings, loans and private equity investments. If you can find an equity investor, your startup would issue ...

    What Happens if You Purchase a Home At a Tax Lien Sale & There Is a Mortgage Lien Owed?

    Purchasing tax liens can be an attractive option for investors. If you're smart and you do your homework, tax liens can guarantee at least some return on your investment. How much you earn depends on what the property owner does after you have the lien – and whether the ...

    Contents of Mutual Fund Annual Reports

    The Securities and Exchange Commission regulates mutual fund companies and the requirement that they send annual reports to all shareholders. Much of an annual report includes legal language and data that an investor may not even read, but that are necessary to fulfill SEC ...

    How to Compare Load to No-Load Mutual Funds

    A mutual fund can give you a couple of big benefits. You get a professional financial management team handling your investment dollars, and you gain ownership of an instantly diversified portfolio. Some mutual funds impose a sales charge, or load, when you buy or sell shares of ...

    Direct Investment in Stocks

    Buying shares directly from a company eliminates broker’s commissions and saves you money. Publicly traded corporations allow direct investment in a few ways. You need to have your shares registered in your name with the company’s transfer agent. A transfer agent is ...

    How to Trade NASDAQ Index and ETF Options

    Options are derivative securities that give traders the right to buy in the form of call options, or sell in the form of put options, a designated underlying security. Options trade against the NASDAQ 100 stock index as well as the exchange traded fund which tracks this index. ...

    How to Use the Proceeds of a Stock Sale to Buy New Stocks

    Active stock investors and day traders frequently scan the market in search of new trading opportunities. They will close out one trade, collect the gain or eat the loss, and use any proceeds to fund a new position. If this is your strategy, just make sure you don't run afoul ...

    What Is a Bond in the Stock Market?

    There are a number of different ways that you can participate in a company's financial fortunes. You can become a part owner of the company by investing in its common stock. Buying the company's preferred stock gives you both an ownership position and a steady stream of income ...

    Fundamental Concepts for Investing in Bonds

    Bond investments are a common asset included in many investors’ portfolios. Bonds experience a low correlation to stocks, and are often used by investors to generate periodic income payments. Investing in bonds can also diversify your assets, effectively reducing certain ...

    How Do I Know Which Stock or Mutual Fund to Invest In?

    Asking which stock or mutual fund you should invest in is like asking which road you should take. The answer depends on where you are now and where you want to end up. Even if you determine which stock or mutual fund you want to buy, investing is a lot like driving down that ...

    How to Spot Investment Trends

    Learning how to identify the latest and greatest ideas, products, theories and discoveries can pay huge dividends, especially if your observation skills are keen enough to spot trends as they emerge. Some investors enjoy trend spotting, but before you join them, understand the ...

    Advantages of Diversified Investments

    When choosing investments you have a number of options including corporate stocks, mutual funds, bonds and precious metals. While it is sometimes tempting to put all of your money into one or two investments that are doing well at the moment, a more diverse investing approach is ...

    How Does a Load Work in Investment?

    Investment loads are a type of sales charge or commission, usually included in the price of the investment. Load mutual funds are the best-known example of investments with load charges, but other types of investments may have a sales load. Any load charged with an investment ...

    Can a US Investor Buy UK Stocks?

    Adding some international stocks to your investment portfolio increases its diversification and gives you exposure to different national economies. The United Kingdom is home to some major global energy and pharmaceutical companies as well as smaller companies dependent on the ...

    How to Find the Net Income on a Statement of Owner's Equity

    Companies typically prepare four basic financial statements: the balance sheet, income statement, statement of cash flow, and statement of changes in owner's equity. The statement of changes in owner's equity, called the statement of owner's equity (SOE) for short, shows the ...

    DJIA Futures: Trading Instructions

    The Dow Jones Industrial Average, or the Dow, is an index that tracks 30 major stocks listed on the New York Stock Exchange. The Dow is sensitive to changes in economic and world events and can quickly rise or fall 100 points. Investors can take advantage of these price ...

    Retained Earnings Vs. Preferred Dividends

    The capital structure of a corporation is the mix of debt and stockholders’ equity used to finance operations. The equity component is made up of stock (common and preferred), warrants and retained earnings. The retained earnings portion is created from profits that have ...

    Are Savings Bonds a Good Investment?

    The federal government collects taxes to pay for its operations, but tax revenue isn't always adequate to pay for all of the government's spending. The U.S. Department of the Treasury issues savings bonds to help meet the government's financial needs. When you buy a savings ...

    What Was Black Monday in the Stock Market?

    Black Monday is the name given to the single largest one day decline in the U.S. stock market. The October 1987 market crash again hit the news in 2012 to mark the 25th anniversary of the event. The crash was devastating to individual investors who could not reach their brokers ...

    Is the New York Stock Exchange the Largest Stock Market in the World?

    The New York Stock Exchange (NYSE) is the largest stock market in the world, by far. The NYSE, often referred to as the Big Board, is almost three times the size of the world's second-largest exchange, the Nasdaq. The Nasdaq is an American exchange, founded in 1971, and like the ...

    Is There Any Way to Short Municipal Bonds?

    Short selling is a way to profit from falling prices in the investment markets. Since municipal bonds do not trade on an organized exchange and many muni issues do not actively trade on the secondary markets, it is not possible to short a specific municipal bond issue. There are ...

    How to Invest in Small Cap Stock

    Small-capitalization stocks represent companies with publicly trading stock outstanding that has a relatively small total market value, based on the market price of each share. No specific benchmark defines small market capitalization, but it is generally agreed that less than ...

    How to Hedge Option Trade

    An option is a financial contract that gives the holder the right, but not the obligation, to buy or sell an asset. A call option allows the holder to buy something of value, from the individual who sold the option. A put option allows the holder to sell an asset at a specific ...

    How to Trade OTCBB Stocks

    Hiding among the many Over the Counter Bulletin Board (OTCBB) stocks is the next Apple or Exxon. Also known as penny stocks, these companies do not have the reporting requirements or regulatory oversight found with NYSE and Nasdaq stocks. Investors interested in trading OTCBB ...

    Stock Grants Vs. Stock Options

    Stock grants and stock options are tools employers use to reward and motivate their employees. Real differences exist between the two options, with benefits and downsides to each. Managing stocks, whether they are options or granted stock, is an important part of any person's ...

    How to Buy Short Term Bonds

    With all of the investment products available to you, it can be confusing when you try to decide which ones to put in your portfolio. The U.S. Securities and Exchange Commission recommends having a mix of equity and debt securities along with a portion of your investments in ...

    The Difference Between an Option and a Warrant

    The words option and warrant are investment terms related to the buying and selling of stock. Both terms refer to a contract that gives an individual the right to purchase shares of stock for a certain price during a specific future period. Both stock options and stock warrants ...

    Difference Between Authorized & Outstanding Shares

    A share of stock represents a share of ownership in a corporation. By buying stock, you become an owner of the company and have the right to vote on corporate issues. Understanding the different types of stock offered by a corporation and how many shares of stock the corporation ...

    Taxation of Corporate Bond Interest

    A bond is a debt security. It is an I.O.U. of sorts. When you buy a bond you are loaning money to the bond's issuer in exchange for the promise of regular interest payments and a return of the face value of the bond upon maturity. Corporate bonds share those traits with ...

    How Is the Pricing Determined for Stock Options?

    When you buy a stock option, you gain control over the underlying stock for a fixed period of time, but you don't actually own the stock. Instead, you pay a premium for the right to purchase the stock for a set price, called the strike price, through the expiration date. How the ...

    The Advantages of Trading Options vs. Futures

    Investors use options and futures contracts to earn profits and hedge their investments against loss. Many investors find trading options contracts less risky and more flexible than trading futures contracts. Options and futures are considered derivatives, which are financial ...

    Bonds vs. Equities in a Portfolio

    Equities, which is financial lingo for stocks, are the two most commonly traded financial assets. For most investors, a combination of bonds and equities provides the ideal balance. However, proficiency in stock trading does not mean that you can apply the same knowledge to ...

    What Are Derivatives in the Stock Market?

    A derivative is a security or contract that derives its value from an underlying security. For instance, the value of a call option is directly related to the price of the underlying stock -- the stock you receive by executing the call. The many types of derivatives that trade ...

    How to Trade the FOREX Weekend Gaps

    Weekend gap trading is a popular strategy with foreign exchange, or Forex, traders. While technically open around the clock, Forex trading closes on Friday afternoon and doesn’t reopen until Sunday evening. Many news announcements and world events that affect currency ...

    Why Do Investors Watch the Dow Jones Closely?

    The Dow Jones Industrial Average, often called "the Dow Jones" or simply "the Dow," is the most closely-watched benchmark of the U.S. stock market. Investors check and discuss it more often than any other indicator of the economy, according to "The New ...

    What Is Meant by Record Date in the Stock Exchange?

    Record dates on stocks are important for corporate actions such as dividend payments or stock splits. For example, when a dividend is paid, the record date determines which investors will receive the dividend payments. The record date becomes a little more confusing when the ...

    When Buying Stocks What Is the Minimum Number to Buy?

    Investing in the stock market involves both benefits and risks. If the company you invest in is profitable, you might receive a dividend or the market price of your stock might increase, giving you capital appreciation. Stocks typically trade in multiples of 100 shares, commonly ...

    How to Sell Common Stock

    Selling common stock is a simple process, particularly if you hold your stock in a brokerage account. If you hold it in certificate form, the certificates must be delivered along with a stock power indicating you give permission to deposit the stock to your brokerage account. ...

    Effect of Rising Oil Prices on the Stock Market

    Oil forms one of the pillars of the global economy. It is absolutely critical to the functioning of the globalized world. Everything from making machinery move to plastics can be traced to oil or some byproduct. Oil makes its impact felt on almost every individual's life, and ...

    What Comprises the Yield of Stocks?

    Investment returns and yields from stocks are not as straightforward as buying a fixed-income investment and earning a set yield. The return you earn from a stock investment is a combination of appreciation and yield, and those numbers will vary as the market moves up and down. ...

    What Goes on Income Statements, Balance Sheets and Statements of Retained Earnings?

    Investors use financial statements to analyze the financial condition of a company before choosing to invest their money. Common financial statements used to make investment decisions include the income statement, balance sheet and statement of retained earnings. Public ...

    How to Trade Stock Sectors

    Investing in stock sectors eliminates the problem of picking one winning stock from more than 2,000 candidates. Stock sectors move with or against the larger economy, which helps eliminate the unexpected price fluctuations that can ruin an otherwise good stock trade. Investors ...

    What Are Pork Bellies in the Stock Market?

    For most people, the market for pork bellies was little more than a punch line to a joke about the absurdities of the financial industry. As bizarre as it sounded, these cuts of pork were traded as commodities on the futures market, with a handful of traders buying and selling ...

    How to Find a Short Sell on Stocks

    Investors who think a stock is overhyped or overpriced can sell the shares short in the hope of getting a strong return. Your goal in shorting a stock is to eventually buy it back at a lower price and earn a profit. Taking a short position can be risky, however. If you've ...

    How to Endorse Stock Certificates

    Depositing paper stock certificates with your broker ensures their safety against theft or loss. It also provides a permanent electronic record verifying that you own a specific number of shares in the company. Depositing the stock certificates in your account makes it easy for ...

    How to Track a Mutual Fund

    Not all mutual funds perform well. The days of "buy and walk away" have long passed, due to volatile markets and a constantly shifting economy. You have to track your mutual fund to make sure that you are not losing money and to measure whether you receive a decent ...

    How to Figure Out How Many Shares of a Stock Were Traded That Day

    Trading volume is considered a key indicator among investors of future price activity in a stock. High volume is seen as a sign of potential major price changes -- up if the activity is moving prices higher, trouble if prices trend downward. Many investors "chart" ...

    Comparison of Short Stock Sales and Options Trading

    You typically buy a particular stock because you expect its market price to go up. But stock prices don't always increase. Sometimes they go down. You can still make money in the stock market when stock prices are dropping instead of rising by employing sophisticated investment ...

    Purpose of War Bonds

    War bonds are securities sold by national governments to their citizens to finance military operations in existing or anticipated wars. War bonds essentially are a loan to the government by a nation’s citizens. As government bonds, war bonds offered security of principal ...

    What Are the Differences Between the Dow Jones, NASDAQ & S&P 500?

    Look at the front page of a newspaper's business section or the home page of a financial website, and you'll usually find listings for the Dow Jones Industrial Average, the Nasdaq Composite and the S&P 500. These three indexes are often treated as indicators of the overall ...

    How to Invest in Petroleum Futures

    Both stocks and futures can be traded online, but petroleum futures traders face two additional hurdles. Although you pay upfront for the initial purchase, an additional margin maintenance amount must be maintained in your account for each contract you trade. Petroleum trading ...

    Pros and Cons of Gold Coins As Investments

    Precious metals like gold and silver have been used as a store of value for hundreds of years. The value of gold does not depend on any single currency, government or company, so buying gold is a way to protect or "hedge" against losses on other investments like real ...

    How to Invest in Bakery

    It matters not whether your friend or relative is looking for money to underwrite his new bakery or whether you have a chance to get in on a hot new industrial bakery start-up promising to produce the world’s best pastries – your financial obligation to yourself ...

    How to Invest Money With Investment Banks

    Investment banking is dominated by market heavyweights Morgan Stanley, Goldman Sachs and JP Morgan Chase. Best known for taking private firms such as Facebook public, investment banks are notorious for earning high fees and providing their investors with excellent returns. ...

    Stock Market Challenges & Tips

    Investing in the stock market is a popular way to build wealth, but stock investing presents a variety of challenges and risks. Putting too much money into an investment that doesn't pan out could result in a major financial setback, and short-term price volatility makes it ...

    How Does a 529 Plan Work?

    Many college savings plans come with their own sets of drawbacks. Some plans put a cap on the parent's income level. Other plans impose taxes on the investor. A 529 college savings plan provides a convenient investment tool for families who want to save money for their children ...

    Margin in the Stock Market

    Trading on margin simply means borrowing money to make securities transactions. For some securities, such as foreign currency, margin trading is lightly regulated. Buying on margin in the stock market, however, is strictly regulated by government agencies, stock exchanges and ...

    How Do Covered Stock Options Work?

    A stock option is a contract between the option buyer and option writer. The option is called a derivative, because it derives its value from an underlying stock. As the stock price changes, so does the price of the option. There are two basic types of stock options, calls and ...

    What Are Penny Stocks, How Do They Work & Are They Worth It?

    With their low cost and potentially explosive returns, so-called "penny" stocks often attract investors who want to spend as little as possible in hopes of reaping enormous returns. Typically priced at less than $5, penny stocks can fluctuate significantly over the ...

    How to Invest in Uranium

    The increasing demand for uranium coupled with dwindling supplies presents traders with several investing opportunities. Uranium is a heavy metal that, after being enriched, powers nuclear reactors that produce clean cheap energy. But enriched uranium is also used in nuclear ...

    Difference Between Life Insurance & Mutual Funds

    Every financial product poses risks and carries advantages for consumers. Well-structured financial plans typically contain a wide variety of products to meet the consumer’s needs and objectives. Mutual funds and life insurance are very common financial products, ...

    High-Risk Stock Investments

    Compared with other investment options, such as bonds or traditional bank savings accounts, stocks expose investors to the most risk. They can be volatile, as rising stock prices can quickly and abruptly change course and lead to market losses. Nonetheless, investors continue to ...

    What Does MLP Stand for in Stock Market?

    Master limited partnerships, or MLPs, are a type of stock market investment that often pays very attractive distribution yields. Most stocks that trade on exchanges are shares of corporations. As the name implies, an MLP is a type of partnership, and investors buy units of the ...

    Mutual Fund Performance Vs. the Market

    Having the right mutual fund can mean the difference between outperforming an index or steady gains. While short-term, money market funds may provide stability, some stock funds can outperform the market or allow for steady, passive income. Understanding the options available to ...

    Saving Bonds Redemption

    There are two forms of savings bonds: electronic savings bonds available at TreasuryDirrect.gov and paper savings bonds. As of January, 2012, the Bureau of the Public Debt stopped selling paper bonds. If you own any paper savings bonds, you can hold them until they mature. Your ...

    How to Invest in Coffee

    Walk down any street, and chances are you’ll see people strolling about holding cups of coffee. The beans producing this delicious brew only grow in temperate climates, which make the crop very vulnerable to cold weather. A frost rumor in Brazil before the harvest begins ...

    What Is the Highest Denomination of Savings Bond?

    U.S. savings bonds are a secure investment backed by the full faith and credit of the federal government. Through the end of 2011, paper bonds were sold through the U.S. Treasury as well as banks and other financial institutions. But in January 2012, the Treasury converted its ...

    What Are the U.S. Government Regulations of Mutual Funds?

    In the U.S., bank deposits are protected through a guarantee extended by the FDIC. Mutual funds and other traded securities, however, have no guarantee that protects an investor's capital. Instead, a series of government regulations monitors the movement of the securities market ...

    How Much Does It Cost to Buy Stocks?

    It is probably possible to buy shares of stock with almost any amount of money. With as little as a few hundred dollars, you can start investing in stocks. The cost to invest is determined by the stocks you want to buy and the purchase method you select. Direct purchase plans ...

    Risk of Losing Money in International Investments

    International investments provide a great avenue to diversify your investment holdings. Many investors purchase foreign securities in hopes of capitalizing on growth in emerging foreign markets. International investments come in many forms, such as stocks, mutual funds and ...

    Indicators of Stock Market Recovery

    When a stock market has been through an extended period of decline, recognizing when recovery has begun can prove difficult. Indeed, regional economies, which set the tone for corporate profits, have been known to emerge from recession only to return to slow growth soon after. ...

    How to Transfer Control of a Stock From a Full Investment Firm

    If you own stock through a full service broker, the commissions to buy and sell shares can be many times higher than the commissions charged by online discount brokers. To save money on commissions and possibly other account fees you can transfer some or all of your brokerage ...

    Types of Personal Investments

    Through investing, you can grow your wealth, save for your retirement or children’s education and have money coming in when you retire or want extra money for vacations, home improvements or other special purchases. Stocks; bonds; mutual funds; certificates of deposit, or ...

    How Do Stock Index Futures Work?

    The futures markets trade contracts that call for the future delivery of commodities and financial instruments. One class of futures -- equity futures -- have contract values based on selected stock market indexes. Stock index futures offer an alternative way to trade the stock ...

    Sectors of the Dow Stocks

    The Dow Jones Industrial Average contains 30 stocks. When you hear that the "Dow" moved up or down, that news summarizes what these 30 stocks did on any given day. Some of the Dow 30 may move up while others decline, so the index is an average of their performance. You ...

    Stock Market Ticker Tape Terminology

    The stock ticker tape reports on trading activity on the major stock exchanges. The letters and symbols that you see scrolling across your television or computer monitor reveal the company’s ticker symbol, the price of the trade, a change in direction of the price from the ...

    Funds Rebalancing

    To control investment risk, an investor creates a balanced mutual fund portfolio that may consist of bond funds, stock funds and other assets. Including a variety of assets in the portfolio reduces the risk that a market event negatively affecting one fund might also affect ...

    Are Treasury Stocks a Classification of Stock Shares?

    The financial press is always full of references to stock classifications, such as blue-chip stocks, growth stocks, airline stocks and micro-cap stocks. "Treasury stocks," however, don't belong on the list, because the term doesn't refer to any of the characteristics ...

    How to Invest During Deflation

    Falling prices and decreasing asset values are symptoms of economic deflation. As the economy slows, demand for goods and services drops and employees are laid off as production slows. Higher unemployment means fewer people with money to spend, which kicks off a new round of ...

    Why Are Time Value Concepts Crucial in Determining What a Bond or a Share of Stock Should Be Worth?

    Money at hand is always more valuable than the same amount of money expected at some future time, even if there is absolute certainty you will receive that payment. This simple idea is referred to as the time value of money and lies at the heart of finance. Thoroughly ...

    Short Covering in Stocks

    The financial news reports often use "short covering" as one reason why stocks went up for the day. Short covering is the final step of short selling stocks, and the act of covering short trades can put buying pressure into the stock market. An understanding of the ...

    Why Stocks Could Collapse

    In theory, stock markets respond to changes in economic indicators such as the housing market or unemployment rate. In practice, stocks sometimes collapse even when indicators are not especially negative. This can happen due to a phenomenon known as “rational panic,” ...

    How Can I Get my Money From my Deferred Fixed Annuity?

    When you purchase a deferred fixed annuity, you are entering in a long-term investment contract with your annuity company. The long-term nature of this investment is one of the reasons why fixed annuities offer a better return than other guaranteed investments. The downside of ...

    How to Find Ex-Dividend Dates of Stocks

    The ex-dividend date is one of the most important dates to know when you invest in stocks for dividends because it helps you determine whether or not you will get paid on the next dividend payment date. In order to receive a company’s next dividend payment, you must buy ...

    How Low Can the Stock Market Go?

    In theory, there is no limit to how far the stock market can decline. The stock market crash of 1929 ended up with an almost 90 percent loss of market value when that bear market was finished. Although investors expect the market to increase over time, values can and do drop. A ...

    What Happens to Short Call Options During a Buyout?

    If you are short a call option, you have the obligation to sell another investor the asset specified in the option contract at a specific price and on a particular date. If the option involves selling a particular stock and the company that issues the stock is purchased by ...

    Explain the Stock Market Ups & Downs

    Stock prices are notorious for their wild and apparently inexplicable ups and downs. Financial analysts refer to this phenomenon as volatility. Stocks are more volatile than just about any other financial asset class, including currencies, precious metals and bonds. The chief ...

    How to Purchase an Indiana College Choice 529 Plan

    Whether you live in Indianapolis or Bloomington, expect your child’s college tuition to be expensive. That’s why the Hoosier State offers Indiana College Choice 529 plans, investment programs that jump-start college savings while offering tax benefits and flexible ...

    Effects of Super Bowl Winner on Stock Market

    Many investors believe the outcome of the Super Bowl, the final game of the U.S. NFL football season, and how stock prices behave for the rest of the year are connected. Interestingly, this relationship does hold up under statistical scrutiny. However, you must better understand ...

    How to Invest in Developed Countries

    If safety is what you are looking for with your investments, invest in developed countries. Developing countries sometimes offer tantalizing gains, but they come with the risk of an untried and possibly poorly regulated system. Risks include fraud, lack of transparency and ...

    How to Read Treasury Bond Prices

    Treasury bond quotes may appear confusing, but if you understand a few of the basics, they give you all the information you need to make an investing decision. A typical 10-year U.S. Treasury note is the 1.625 percent notes due Nov. 15, 2022. The 1.625 percent refers to the ...

    How do I Invest in Stocks Without a Broker?

    A brokerage account provides the flexibility to buy and sell shares any time the stock markets are open. The trade-off to using a broker is the commission you pay each time you buy or sell shares. For an investor who wants to buy and hold shares for the long term, direct stock ...

    How to Determine the Required Rate of Return for Equity

    The required rate of return on equity measures the return necessary to compensate investors for their investment risk. The higher the risk, the greater the required return on equity. You need to know the company's beta -- a measure of how the stock moves relative to the market ...

    How to Short a Call Option

    Call options give the option buyer the right to buy the underlying stock at a predetermined price -- the strike or exercise price. The short -- or uncovered -- call option strategy takes the other side of the trade and involves selling call options to generate income from ...

    What Is Stock Market Leverage?

    Leverage is often spoken of concerning the real estate market, but stock market leveraging is a practice often used by investors. The basic concept of leverage in the stock market, also called margin trading, involves borrowing capital to invest in more stock than what you can ...

    How to Get Money From Stocks to Bank Account

    Online traders no longer wait for the check from a stock sale to arrive in the mail. Just close out a trade and the proceeds are instantly credited to your trading account. But traders hoping to immediately transfer the proceeds to a bank account must contend with the mandatory ...

    Types of Risk in Fixed-Income Investments

    Investors often use fixed-income investments as a way to guard a portfolio from extreme market fluctuations apparent in other asset classes, such as equities. Investing too lightly in bonds can leave investors without the asset protection they need, while placing too much money ...

    The Impact of Baby Boomers' Retirement on the Stock Market

    The baby boom generation refers to the 78 million babies born in the U.S. after World War II. In 2008 the oldest baby boomers reached retirement age and were eligible for Social Security benefits, according to the Congressional Budget Office’s 2009 “Will the Demand ...

    Hedge Fund Managers Vs. Administrators

    Hedge funds are privately held investment vehicles. They vary in size, managing anywhere from $1 million to $10 billion or more. In general, hedge funds consist of a group of high net worth individuals and institutional investors. Due to a lax regulatory environment, these ...

    What Influences Bond Rates?

    Bond rates are influenced by a number of interrelated factors that ultimately determine the price of the issue. Bonds can be sold below par, at par or above par depending on the attached coupon or interest rate. The prevailing interest rate, the quality of the issuer and the ...

    Differences Between Securities & Stocks

    Investments are a way to put money to work for you. Rather than leaving large sums of money in a bank account (which often bears low interest rates), savvy investors move the money into types of securities, hoping to grow the sum quickly (or at least faster than the money would ...

    How to Invest in Aluminum

    Aluminum doesn’t immediately come to mind when you think about investing in metals. Aluminum doesn’t have the allure of gold and silver, and it’s not useful as a hedge against inflation or deflation. But aluminum closely follows changes in the housing and ...

    Does a Stock Dividend Increase or Decrease Assets and Liabilities?

    A company balance sheet lays out the accounting equation: assets equal liabilities plus stockholder's equity. The equity portion of the balance sheet has two major subdivisions -- capital and retained earnings. Capital includes paid-in capital -- the par, or nominal, value of ...

    Why a Stock Split May Not Be of Great Value to Existing Shareholders

    Investors tend to like stock splits. It always looks good to get more shares in your brokerage account at no cost. Although a stock split is generally viewed as a positive for a company, the actual financial benefits to investors are zero at the time of the split. What happens ...

    Futures Vs. Commodities

    Commodities and futures often go hand in hand, although the terms represent different concepts. Commodities are things you can buy or sell -- physical goods such as oil, grain or metals. Futures are contracts to buy and sell things in the future. They come together in commodity ...

    Why Do Hedgers & Speculators Use Futures?

    The two kinds of futures contracts are physically settled and cash settled. A physically settled futures contract obligates buyers to take delivery of a specific quantity and quality of an underlying commodity or financial instrument from the contract seller at a future date for ...

    What Is Bear Market in Stock Market?

    Trending in the stock market is often referred to as either bullish or bearish. A bull market is a period when stock prices are surging, while in a bear market, stock prices are declining. Investors use a rule of thumb to define bear markets, but a bear is usually pretty obvious ...

    Are Certificates of Deposit Insured Per Account or Per Owner?

    A certificate of deposit, or CD, usually pays higher interest than a savings account in return for keeping your money invested for a set period. A federally insured CD is a safe investment, but your CDs are protected from bank or credit union failure only if you adhere to the ...

    Basic Stock Market Principles

    The stock market offers greater growth potential than many other savings and investment options, but it also presents a variety of risks that can limit returns. Taxes, trading fees and unpredictable stock prices are just a few of the hazards that can cause losses in the stock ...

    The Basics of How to Invest in Shares

    It is easy to get started and buy stock shares with an online discount brokerage account; the challenge is to understand how the markets work and to develop your own method to pick stock investments. There are over 5,000 stocks to choose from and it seems like there are that ...

    How to Track Old Stock Prices

    Investors can track their old stock prices for free thanks to online financial data providers. Decades of historical information can be accessed and downloaded to back-test trading strategies and understand historical price movements. Investors can project where the stock price ...

    When an I or E Savings Bond Matures Is It Worth More Than the Face Amount?

    U.S. Savings Bonds came on the scene shortly before World War II as a safe, secure long-term investment backed by the full faith and credit of the United States. Since World War II, there have been several series of Savings Bonds offering different interest rates and maturity ...

    What Are the Dangers of Silver Investment?

    Whether you purchase bullion or another form of physical silver, a silver certificate or place money in a silver savings account, you’re investing in the same commodity: silver. While many investors place funds in silver during times of economic instability as a cushion ...

    What Are International Stocks & Bonds?

    Today’s investors aim to diversify their holdings across different asset classes and geographic regions. Portfolio theory holds that diversified investments provide higher returns and lower risks than limited portfolios do. International instruments like stocks and bonds ...

    Can Series I Savings Bonds Earn Negative Interest?

    The U.S. Treasury’s Series I Savings Bonds are an inflation-indexed security backed by the full faith and credit of the federal government. The I bonds’ interest rate is adjusted every six months, in accordance with changes to the U.S. Consumer Price Index for Urban ...

    Who Uses Ultra-Short Bond Funds?

    Ultra-short bond funds have become popular because they offer higher yields than money market funds -- their portfolios contain higher-coupon bonds that are about to mature. Depending on the fund specifications, the portfolios can contain Treasury, government agency, ...

    Why Should I Invest in Lower End Value Stocks?

    Value stocks sell at an undervalued price relative to the issuing company's financial performance and the performance of the stock's industry sector. Such stocks typically have a low price-to-book ratio and low price-to-earnings ratio. That means the company's earnings might ...

    The Impact of Economic Indicators on the Stock Exchange

    Predicting trends has been every investor’s objective as long as the stock market has existed. This is particularly important for the small investors who must make the best of available resources to maximize returns on their portfolios. While economic indicators cannot ...

    What Are Stock Market Short Positions?

    Knowledge of the concepts of long or short positions in stocks is fundamental to understanding how trading works in the market. A long position is ownership of shares of a stock, and the trader who is long profits if the stock goes up in value. The trader with a short position ...

    How to Record Sales of New Shares of Common Stock

    Companies can raise money without taking on debt by selling new shares of common stock. Although the stock sale improves a company’s cash situation, the transactions do not affect the income statement or the profit and loss statement. Whether you use an accounting software ...

    How to Compute Annuity if Given the Rate & Number of Years

    Annuities represent any investment or loan that consists of a regular series of payments over a certain period. A car loan or mortgage repayment schedule is effectively an annuity for which you want to know the monthly payments. A lump sum investment that receives regular ...

    How to Analyze Penny Stocks

    Penny stocks are stocks that are usually priced under one dollar a share and are thinly traded, which can make them a challenge to research. Penny stocks don't have the same reporting requirements as stocks listed on the major exchanges, nor do they have the same regulatory ...

    How to Invest in Undeveloped Countries

    If you’ve heard enough clichés about our shrinking planet to last a lifetime, it may be time to move past the platitudes and take a monetary interest in bringing the neediest of these neighbors into the 21st century. Not every investor has the interest or appetite to ...

    How to Find the Average Price of Common Stock

    Corporations can issue two types of stock: common stock and preferred stock. If you own common stock in a company, then you have a proportional ownership interest in that company. You do not have to buy all your common stock in a company at the same time but rather you can ...

    The Impact of Short Sale Restrictions

    A short sale is an attempt to profit from a price decline in a financial asset or commodity by selling borrowed securities and buying them back at a lower price. Say a trader borrows 100 shares from a broker and sells them for $50 each on the stock market. If he buys them back ...

    Catastrophe Stock Market Theory

    If you're old enough to invest in stocks, you've probably discovered that life doesn't always flow smoothly. A boat can sail calmly down a river then suddenly find itself plunging over a waterfall. Stocks can plunge in value or rocket upward just as abruptly. Catastrophe theory ...

    How to Invest in a Direct Stock Purchase Plan

    Direct stock purchase plans are an alternate way to buy shares of certain companies. Benefits of direct stock purchase plans include low or no fees, the ability to set up automatic periodic investments and automatic reinvestment of earned dividends. Individual companies set up ...

    How to Invest With Trader

    When you give your money to a trader to invest for you, it is just like hiring any other professional portfolio manager, except that the investment management method is to trade many times a day in and out of positions to take advantage of small price movements. This is called ...

    What Is Meant by the Market Price of a Stock?

    As an investor, the most basic piece of information you need to know about when buying or selling a stock is its market price, which will give you an indication of how much you can buy or sell a stock for and can be used to analyze the value of a company and historic stock ...

    How to Make Bonds Work for You

    Your personal investment needs and risk tolerance govern the kinds of bonds to put in your portfolio. Bonds come in a variety of quality levels from the most secure, such as U.S. Treasury securities and AAA-rated corporate and municipal bonds, to lower-rated AA, A and BBB-rated ...

    Short Covering Vs. Short Squeeze

    In expectation of a market decline, a short seller borrows an asset at its market price. He then buys the asset later when the price goes down. Once he returns the borrowed asset, he nets a profit. The act of buying the asset at the lower price is called short covering. When a ...

    What Is Sensex in the Stock Market?

    The Sensex stock market index is best described as the Indian equivalent of the Dow Jones Industrial Average. Like the Dow in America, the Sensex tracks 30 of India's biggest and most profitable companies across most major sectors of the economy. Also like the Dow, the direction ...

    GLD vs. GDX for Portfolio Diversification

    Investments focused on the price of gold will provide additional diversification to a portfolio of stocks and bonds. Exchange-traded funds — ETFs — that own gold-related investments provide an easy way to add gold to your portfolio. Although both are ETFs, SPDR Gold ...

    Where Can I Find the Rates for U.S. Saving Bonds?

    The U.S. Department of the Treasury has been issuing savings bonds since World War II, under many interest rate schemes. As of late 2012 there were just two types of savings bonds, series EE and series I bonds. The Treasury has moved most of its savings bond information online, ...

    What Are the Risks Associated With Investing in an Income Stock Vs. a Growth Stock?

    Income and growth stocks offer investors ways to identify potential profit opportunities, but they also present their share of risks. Investors are seeking profits from both, but they turn to each investment type with different strategies in mind. Income stocks normally offer a ...

    What Is NAV in the Stock Market?

    A mutual fund manages a portfolio of stocks, bonds, cash or other assets. You buy fund shares directly from an investment management company and sell shares to the investment company at the net asset value, or NAV, per share. The NAV is calculated each day after the close of the ...

    How to Look Up Short Interest on Stocks

    The short interest on a stock is the number of shares that traders have sold short. Short selling is a strategy to profit from falling share prices. To sell a stock short, a trader must first borrow the shares and eventually the sold short shares must be repurchased and returned ...

    How Much Can I Expect to Make From a Bond Fund?

    The category of bond funds covers a large range of investment choices. The yield a bond fund pays depends on the types of bond the fund owns and the current interest rate environment. Published yield data from individual bond funds give you an estimate of how much income a fund ...

    User Guide to Stock Market Orders

    Stock market orders give investors additional control and flexibility in the purchase and sale of stock shares. Having an order in place does not require the investor to accept the current market price of the stock. Different types of stock market orders allow investors to have ...

    Reasons for Maintaining a Stock Portfolio

    Saving and investing in accounts or assets that let your money grow over time is essential to build wealth and have the financial means to do what you want during retirement. Holding a collection of different stocks, known as a stock portfolio, is a common investment strategy. ...

    How to Invest in the Stock Market to Supplement SSI

    When you plan your retirement income, you can combine your estimated Social Security benefits and your estimated income from stocks. The Social Security Administration provides a free benefit estimator at ssa.gov/estimator. If your benefit won't allow you to live comfortably, ...

    How to Hedge Futures Contracts With Options

    Futures contracts are highly leveraged financial instruments. When the market moves against a trade, each tick is magnified by the leverage amount. A small loss can quickly overwhelm a trader’s account and could trigger a margin call. Traders can offset some of the risk by ...

    What Is Mutual Fund Brokerage Firm?

    Unlike full-service brokerage companies, mutual fund brokerage firms are licensed to offer investors mutual funds only. You cannot purchase stocks, bonds or investments other than through mutual funds. With a mutual fund brokerage company, you might encounter a more extensive ...

    How to Invest in Oil Stocks in Brazil

    Brazil has a national oil company -- Petroleo Brasileiro Petrobras SA -- which controls exploration, production, refining, and distribution of crude oil and the resulting fuel products in Brazil. Petrobras controls the oil industry in Brazil from the drill to the gas station. ...

    Gold Investment 101

    Gold is a precious metal that has been used as a form currency and store of value for thousands of years. While the stock market tends to be the focus of attention when it comes to investing, some investors buy gold and other metals such as silver or platinum. Gold investing can ...

    How to Buy Stocks & Receive a Paper Certificate

    Electronic trading made stock ticket tapes obsolete, and paper stock certificates are likewise heading for extinction. Many companies no longer print paper stock certificates, and brokerage firms discourage investors from owning them. Investors who want paper stock certificates ...

    Oil Futures & Contract Limits

    Oil futures are contracts to buy or sell a fixed quantity and quality of oil for delivery on a future date at a price agreed upon in advance. These futures are traded on futures exchanges like the New York Mercantile Exchange -- NYMEX -- and the Intercontinental Exchange, known ...

    The Illinois Public Funds Investment Act

    Public agencies in Illinois invest public funds in financial products, including Treasury bills, bonds, money market mutual funds and interest-bearing savings accounts. The Illinois Public Funds Investment Act -- an Illinois law in effect since July 2004 -- makes public agencies ...

    How to Trace Old Stocks

    Companies frequently go out of business, change their name and get bought out, so it takes some perseverance to track down an old stock. Public and university libraries keep financial reference books like "Moody’s Manual" indefinitely, and a wealth of stock ...

    How to Place Pending Forex Order

    A pending order in the foreign exchange, or forex, market instructs your broker to automatically buy or sell a currency when the market reaches a certain price in the future. This type of order differs from a market order, which instructs your broker to immediately buy or sell ...

    How to Transfer U.S. Savings Bond to Church

    Although it is possible to transfer a U.S. savings bond to a church, your good deed won't go unpunished, courtesy of the IRS. When you transfer a savings bond to anyone who is not a family member, you have the bond reissued in the recipient's name, and any accumulated interest ...

    How to Find the Dollar Price of a Bond

    Negotiable bonds issued by corporations, the Treasury Department and state or municipal governments are essentially IOUs. Each bond has a par value. Par value is the amount the issuer must pay the bond owner to retire the debt when the bond matures. A bond’s price will ...

    Turn Over Ratios for Mutual Funds

    Turnover ratios of mutual funds tell you what percentage of the portfolio assets are traded during the previous year. High turnover rates usually mean higher transaction fees for the fund, translating into higher management costs and lower returns. Such portfolio transactions ...

    How to Pick Good Stocks & Bonds

    Picking good stocks and bonds can lead to steady returns and an increase in the value of your portfolio. According to the 2010 Census, the total return for stocks after inflation was 13 percent. In December 2012, Businessweek reported an average return of 10 percent on U.S. ...

    Guide to Hedging With Treasury Bond Futures

    U.S. Treasury issues bonds, known as T-Bonds, are considered one of the safest investments available, but they are not without risk. If interests rates rise after you purchase a T-Bond, the price of the bond will fall -- this is known as interest-rate risk. If you have ...

    How Often Does a Savings Bond Grow?

    Although older savings bonds have interest credited twice a year, newer bonds accrue interest every month. How the U.S. Treasury handles the crediting of bond interest indicates how fast a bond will increase in value.There will be an interest penalty if you cash in a bond within ...

    The Effect of Interest Rates on Stock Market

    The stock market reflects the overall health of the economy. One measure of that health is rising or falling interest rates. The Federal Reserve raises or lowers interest rates to fight inflation or make it easier for companies to borrow money. Most commercial lending ...

    Can an Education IRA Transfer to Another Child?

    An Education IRA, also known as a Coverdell Education Savings Account or ESA, is a tax-advantaged college savings vehicle. Parents can make contributions to a Coverdell ESA on behalf of their children up to the age of 18. If your student decides not to go to college, withdrawals ...

    How to Trade Equity Futures

    Equity futures are futures contracts that are valued based on popular stock market indexes. Equity futures allow traders to use a higher level of leverage than they could trading stock indexes with other securities, such as exchange-traded funds. Because the futures exchanges ...

    The Role of Government Bonds in the Economy

    Government bonds are a form of public debt that individuals, corporations, or government entities can purchase. When you purchase a government bond, you assume the role of a lender. You are essentially lending the government money in exchange for the promise of future repayment ...

    Sale of Common Stocks

    The actual sale of common stock is a pretty simple process. Just place the sell order with your broker, and she handles the details and credits your account with the proceeds. However, shares of common stock are a capital asset, and you’ll end up with a taxable gain or ...

    At What Point Is a Stock Removed From the Market?

    When a stock is delisted, it is removed from the market. A securities exchange can compel the issuer of a stock to delist the security for several reasons. An issuer also can voluntarily delist a security. If the company that issued a security no longer exists, the stock is ...

    How to Account for Buyback of Shares

    Perhaps the most compelling reason a company buys back shares of its outstanding stock from the open market is to improve financial statements. A share buyback, also known as a share repurchase, increases the return on assets, along with increasing stockholder equity. Once ...

    Is a Mutual Fund a Security?

    Investment companies known as mutual funds sell fund shares and use the income generated from sales to manage and maintain a portfolio of securities. A mutual fund may choose to focus its portfolio on a particular type of security or combine types of securities as an investment ...

    Why People Invest in Stocks

    People invest in the stock market for a variety of reasons -- to strengthen their retirement, for example, or perhaps to earn a little extra on income. Sometimes it is a matter of having control in a company. According to Morningstar, people often invest in stocks because they ...

    The Impact of Technology on the Stock Market

    There was a time when boisterous traders at the New York Stock Exchange yelled out orders to each other, creating a raucous din. When a stock traded on the strength of a news story, traders gathered in the stock's trading area and started shouting matches that sounded like ...

    How to Distinguish Between Financial Futures & Forward Markets

    A physically-settled financial futures contract obligates a buyer to take delivery of a specified quantity and quantity of an underlying financial asset from the contract seller at a future date for a price set in advance. Forwards are similar, but can be distinguished by where ...

    The Effect of Interest Rates on Investments

    Interest rates have a massive impact on the whole economy, and influencing the rate is one of the strongest tools at the disposal of a central bank. The central bank sets a target interest rate and accepts deposits or loans out money in an effort to influence market rates, ...

    How to Buy Options if You Don't Own Stock

    You do not need to own stock to buy stock options. However, you do need a stock brokerage account. With a brokerage account, you can apply to the broker to be approved for options trading. The types of options trading the broker will allow is be based on your investing and ...

    How to Invest in the DJIA

    The Dow Jones Industrial Average is the most widely followed stock market index. The DJIA tracks the stock prices of 30 major U.S. companies including Coca-Cola, IBM and Exxon Mobil. You cannot invest directly in a stock index, which is simply a number that has no ability to pay ...

    How to Build a Laddered Bond Portfolio

    Short-term bonds give investors stability of principal but have relatively low yields. Long-term bonds usually pay higher yields but have significantly higher price volatility; having your money tied up in long-term bonds isn't ideal if rates increase. A bond ladder greatly ...

    Stock Market Questions & Answers

    Companies seeking to raise money for growth sometimes choose to sell shares of stock to the public instead of taking out loans, issuing bonds, or other financing methods. A share of stock represents a small fraction of ownership in the corporation. The stock market involves the ...

    How to Read a Minute Stock Chart

    For fast-acting stock traders, a minute chart gives a detailed, close-up picture of the day's action. A minute chart shows price changes broken down by very short intervals: one-minute, five-minute and ten-minute timespans, over which nearly every large trade will cause a ...

    How to Calculate Weighted Averages for Loan Maturity

    Weighted average loan maturity refers to when, on average, a portfolio of loans will come due. A weighted average differs from a simple arithmetic average, however. When calculating a weighted average figure, the bigger loans have greater weights. This better represents the ...

    How Often Should You Sell a Mutual Fund to Take the Profits?

    As a type of investment, mutual funds are designed to be long-term investments. This type of fund is not intended as an investment you buy into and sell out of as the markets move up and down. Other types of funds -- such as exchange-traded funds, or ETFs -- are more suitable ...

    When Should I Turn My Savings Into an Annuity?

    Buying an immediate annuity is one way to turn your retirement savings into a guaranteed monthly income, but plan carefully before committing: Starting an immediate annuity is an irreversible step. When to start the annuity payments depends on the overall financial plan for your ...

    Seasonal Stock Market Trends

    Each year, the stock market tends to repeat certain seasonal trends. These seasonal trends affect individual stocks and the stock market as a whole. When investors have a thorough understanding of how these trends work, they're able to gain a slight advantage when it comes to ...

    Consequences of the Stock Market Failing

    The relationship between stock prices and the broader economy is reciprocal. Not only do the health and expected future growth rate of the economy influence stock prices, but stock prices also affect the economy. Falling stock prices have far-reaching consequences on ...

    What Do I, EE/E, HH/H & SN Stand for When You Are Talking About Savings Bonds?

    Since the U.S. Savings Bond program began in 1935, the U.S. Treasury has issued 13 Savings Bond series. Each series bears a unique letter designation that identifies that series. As economic conditions changed over the years, the Treasury responded by retiring old series and ...

    How to Invest in Treasury Inflation-Protected Securities

    Treasury Inflation-Protected Securities, or TIPS, can help protect your portfolio from inflation. They adjust the principal in your investment according to the Consumer Price Index. If that index rises, your principal increases. If the index falls, your principal is reduced. ...

    How to Record Bond Issuance & Interest

    When a corporation issues a bond offering, the bond buyers become the company’s newest creditors. The company is obligated to make regular interest payments and to pay back the face amount of the bond at maturity. The company must also keep accounting records of the debt ...

    Interest Rate Risk Vs. Reinvestment Rate Risk

    Fixed income securities such as bonds are instruments that typically pay interest, called the coupon, throughout their lifetimes and then return the face value at maturity. Even though they are less risky than stocks and commodities, bonds do have several risks, including the ...

    What Are Substantially Identical Mutual Funds?

    If you sell an investment -- such as a mutual fund -- for a loss, the tax rules let you use that loss as a write-off. However, the Internal Revenue Service does not allow investors to game the tax rules by selling a security for the loss and then buying it right back -- a wash ...

    How Can Smaller Investors Obtain Access to Private Equity Investment?

    Private equity can produce some of the highest returns in the financial markets. Historically, private equity performance exceeds that in the broader stock market by as much as 3 percent annually, according to a 2012 National Bureau of Economic Research report. It's not ...

    What Is the Difference Between Debt Preferred Stock & Common Equity in Capital Structure?

    If you look at a company’s balance sheet, you will immediately notice that it is laid out according to the accounting equation -- assets equal liabilities plus stockholders' equity. The left side, assets, represents what the company owns. The right side is the firm’s ...

    What Is After Hours in the Stock Market?

    After-hours trading refers to the buying and selling of publicly traded securities after the stock markets, which include the American Stock Exchange, the New York Stock Exchange and Nasdaq, close. For the New York Stock Exchange and Nasdaq, after-market hours run from 4 p.m. to ...

    Bond Market Size Vs. Stock Market Size

    The capital market is composed of the bond market, in which debt instruments are issued and traded, and the stock market, in which shares of ownership in companies are issued and traded. In the United States and worldwide, the bond market is much larger than its stock market ...

    Difference Between Preference Share & Equity Share

    The capital structure of a company describes how it pays for its assets. It consists of the company’s liabilities and its equity. The equity portion measures how much has been invested into the company by shareholders – known as shareholders’ equity – as ...

    How to Read Interest Rate Futures Listings

    Each interest rate futures contract is linked to a specific underlying debt instrument, such as U.S. Treasury bonds or euros. Investors purchase interest rate futures contracts to profit from interest rate fluctuations in the debt instrument. Understanding the information ...

    How to Invest in a Mid Cap Stock Index

    Money management companies such as TIAA-CREF and Roxbury Capital Management refer to mid cap stocks as the sweet spot of the stock market. "Cap" is market capitalization, or value, of a company. Mid caps fit in between very large companies and small cap stocks. ...

    Where Should I Invest My Money If I Have Four Years Until Retirement?

    The closer you get to retirement, the more you worry about where your money is and how to manage it best and the more important it is to determine whether you're really ready to live on your retirement income or need to work longer and invest more. Investing when you're five ...

    What Is RSI in the Stock Market?

    In the stock market and other financial markets, "RSI" refers to the relative strength index, an important technical indicator in trading stocks, bonds, commodities, futures, options and currencies. It tells you approximately how much your security is overbought or ...

    Hedging Strategies for Stocks

    Traders use hedging strategies to reduce risk. Hedging involves taking positions that offset each other: If one position loses value, the other gains value. Hedges can be applied and removed quickly, providing dynamic protection during times when the primary position is at ...

    How Does the Stock Market Influence our Economy?

    Most days the stock market goes unnoticed, quietly ticking up and down. Every so often, however, it climbs or crashes. Suddenly, it's the leading news story. The stock market is one of the gauges of the economy. The health of the stock market has a far-reaching impact, economics ...

    Minimum Margin for Futures

    A physically settled futures contract obliges the buyer, or long position, to accept delivery of a specified quantity and quality of an underlying commodity or financial instrument from the seller, or short position, by a given date for an amount of money set in advance. ...

    How Do I Buy Stocks Direct From Companies?

    Many companies, including household names such as Home Depot, General Electric and Procter & Gamble, offer direct stock purchase plans. When you bypass brokers by purchasing shares from a company, you save money on commissions. Plus, these plans typically allow you to invest ...

    How to Pick Good Penny Stock

    Companies just starting out list their stock on the over-the-counter (OTC) exchange or on the pink sheets. The stock prices range from $2 a share all the way down to fractions of a penny, and this is why they are known as penny stocks. Some of these fledgling companies will make ...

    How to Buy Partial Stock

    Partial shares of stock are created when your broker or a company you’ve invested in credits you with part of a share of stock. Such fractional shares are a plus for investors who prefer to invest in terms of dollars. For example, you might plan to add $500 per month to ...

    How to Claim Unclaimed Dividends

    When a company becomes successful and no longer needs to plow all its profits back into the business, management can use those funds to pay stockholders a dividend. The company is obliged to report the dividends it paid to the Internal Revenue Service. Shareholders need to claim ...

    Common Risk Factors in the Returns on Stocks & Bonds

    Risk in stock and bond investments is all about what might cause you to lose money on those investments. There are six main types of risk, but their varying components can be interrelated. For example, a rise in inflation limits consumer buying power, so the Federal Reserve ...

    Social Media Tools for Stock Portfolios

    With the development of social media tools, which include microblogging and crowdsourcing platforms, you can access the ideas of experienced investors to manage your stock portfolio. Large social media websites, such as Facebook and Twitter, enable you to follow winning ...

    The Size Limits for Small-Cap, Mid-Cap & Large-Cap Stocks

    Read the personal finance press and you'll see countless references to "small-cap," "mid-cap" and "large-cap" stocks. With these terms so widely used, you might think there was a single, agreed-upon scale for defining stocks according to company ...

    How to Invest in the Railroad

    The railroads play an important role in the economy, and some analysts see railroad companies as a stable investment because of their limited competition, consistent dividends and developed infrastructure. The industry includes several large railroads that cover most of the ...

    What Are the Risks Associated With Investing in Foreign Government Bonds?

    Nearly every government in the world issues bonds to finance operations and refinance maturing or higher-interest debt. Most advanced countries with sound economies issue bonds with little default risk, but in recent years, countries such as Greece and Portugal have become risky ...

    How Much Do Puts Cost in the Stock Market?

    Because there are hundreds of different puts with different parameters trading against each stock with options trading, you can find put contracts which cost just a few dollars up to puts costing thousands of dollars. The important consideration is determining whether buying the ...

    What Are the Hours of Business for the New York Stock Exchange?

    The New York Stock Exchange first established regular trading hours in 1871, when it began its auction system of matching orders to buy or sell stocks. Before then, trading was done in separate morning and afternoon sessions. In 1887, the trading day was set at 10 a.m. to 3 p.m. ...

    Commonly Used Stock Exchange Abbreviations

    The stock market world is filled with abbreviations, starting with NYSE for the New York Stock Exchange and regulatory authorities such as the the SEC for Securities and Exchange Commission. All publicly traded securities are identified by abbreviations called ticker symbols. ...

    How to Scan for Stocks

    With tens of thousands of stocks to choose from, you have to narrow down your investment choices. The internet offers a number of stock screeners that can help you find stocks that meet specific criteria that matter to you. From that pool of stocks, you can choose the ones that ...

    How to Buy a Stock on Margin

    Buying stock on margin means borrowing some of the money you need from your broker. The amount you put up is your margin. A margin trade enables you to buy more shares with your money, so your profit potential is greater. However, your risk is also higher because more shares ...

    How Bank Certificates of Deposit Work

    Certificates of deposits, also known as CDs, are one of the oldest and most venerable investments around. However, unless you understand how bank certificates of deposit work, you could find yourself forfeiting some or all of your return on investment should you decide you need ...

    What Is a Stock With No Face Value Called?

    The face value of a stock is also called the par value. Logically enough, a stock with no face value is a no-par value or no-par stock. "Face value" refers to the share value printed on the stock certificate. No-par stocks should state just as clearly that they have no ...

    How to Sell Savings Bonds Before They Have Matured

    U.S. savings bonds are nontransferable securities, so you can’t sell them on the market the way you sell negotiable bonds. However, you can redeem both Series EE and Series I savings bonds before they mature. In practice, this amounts to selling the bonds back to the ...

    What Is Stock Price?

    An entire industry of analysts and technicians works diligently trying to predict stock prices. The fact that many predictions are wrong attests to the fact that it is difficult to pinpoint exactly what makes up a stock price. The primary definition relates to earnings per share ...

    What Kind of Options Can Be in an IRA?

    Options come in two types -- puts and calls. The power of options when investing or trading is how the many different puts and calls available in the market can be combined into options strategies. Of the 40 different options strategies, most brokerage firms will allow the use ...

    How to Find Bond CUSIP

    The Committee on Uniform Security Identification Procedures (CUSIP) issues unique identifiers for stocks and registered bonds. This speeds up transactions and minimizes errors due to misspelled names. A CUSIP ID has nine digits, the first six of which are letters that identify ...

    How to Trade Options in Bear Market

    Bear markets reflect slowing economic growth and corporate financial problems. Fearful traders panic and dump their holdings at a loss, which pushes stock prices down further and ignites a fresh round of selling. Investors can use several bear-option strategies to profit from a ...

    Rules & Regulations for Series I U.S. Savings Bonds

    U.S. savings bonds are low-risk investments sold by the U.S. Treasury that provide the government with funds to help finance its operations. Series I savings bonds are a type of inflation-indexed bond, with returns that adjust based on the level of inflation in the economy. ...

    How Are Stock Prices Determined?

    Investors value stocks for a number of factors, such as company earnings, dividends paid, prospects for growth and relation to general economic conditions. But in the final analysis, a stock's price is determined by supply and demand. If a lot of investors want to buy a stock, ...

    How Many Days Is the Stock Market Open a Year?

    The New York Stock Exchange sets the pattern for stock trading in America. Other markets have traditionally followed the NYSE's trading days and hours. Since 1952, that has been a Monday through Friday schedule after the NYSE abandoned a two-hour Saturday trading session that ...

    How to Determine What Bearer Bond Is Worth

    Bearer bonds are unregistered investment securities that are owned by whoever possesses them. As these bonds are payable to the person bearing them, they are as liquid as cash. Because the bonds are negotiable without the need to record a transaction, as stocks or registered ...

    How to Invest in Metal

    Many investors think only in terms of gold, platinum or silver -- precious metals. Metal investing, however, includes many more options. Depending on the amount of time you have to watch the market, and the time you plan to sit on the investment, other metals, including aluminum ...

    What Is OB on the Stock Market?

    Some stock ticker symbols appear online or in stock tables with a period and the letters "OB" after the ticker. Such a suffix -- as in "ABC.OB" -- means the stock trades on an over-the-counter bulletin board that is run by the National Association of ...

    How to Invest in an IPO

    Private companies raise money to fund their operations and grow by selling an Initial Public Offering of stock. Investor dreams of purchasing shares before the IPO date then quickly sell them in hopes of making a tidy profit. But IPO investing is expensive and most individuals ...

    How Much Money Is Needed to Start Trading Futures?

    To trade futures, you must first set up a brokerage account with a licensed futures broker. Each broker sets its own policies regarding minimum funding for an account, so by shopping around you can often find brokers with very low minimums -- as low as $100 at publication date; ...

    How to Invest in Futures and Options

    Futures and options often attract investors who do not have a lot of funds to invest. Option and futures contract investing share some attributes that attract various types of traders. They both derive their values from underlying assets such as stocks, bonds and commodities. ...

    Low-risk and High-yield Investments

    Investments with low risk offer relatively low returns, while investments with higher risk can yield larger returns, creating a trade-off between risk and reward. Certain low-risk investments like treasuries and certificates of deposit can offer respectable returns, but ...

    Stock Market Chaos Theory

    What started as scientific theory used to explain the dynamics of mathematics, physics and science problems ultimately found its way to the stock market. Called “the hottest new topic” in scholarly scientific communities in 1988, according to Vienna’s Ludwig ...

    How to Find Payable Common Stock Dividends

    One of the rewards of being a common stock shareholder is receiving income from the corporation in the form of cash dividends. When the company announces a dividend, the corporation is obligated to distribute the cash to its shareholders at a future date. The obligation to pay ...

    Why the Stock Market Makes Corrections

    Stock prices can be volatile. From day to day, the price of almost every stock in the world fluctuates, sometimes significantly. When the stock market as a whole goes down by at least 10 percent, the sell-off is technically dubbed a correction. While hardly any investors want ...

    How to Decide Which Savings Bonds to Sell

    Investors purchase savings bonds for the safe, guaranteed return the bonds provide. Savings bonds are affordable instruments issued in a variety of denominations, interest rates and maturity periods. But as economic conditions and interest rates change, bond owners should ...

    How to Compute Weighted Average Cost of Capital With Preferred Stock

    The weighted average cost of capital tells you how much of a return a company needs to make on an investment to make it worth the investment. For example, if you're starting a new company, you have to factor in the cost of debt, dividends to preferred shareholders and returns to ...

    How Do I Buy U.S. Saving Bonds?

    In the past, people bought savings bonds at the local bank. Traditional paper savings bonds were purchased at a 50 percent discount to the denomination and earned interest to reach that face value. Starting in 2012, The U.S. Treasury stopped selling paper bonds and now requires ...

    How to Invest in Grain

    Investors can find new profits by trading in grain commodities. Corn, soybeans and wheat are popular grains enjoying significant price increases from worldwide rising demand. Investors can gain exposure to the grain market by trading agricultural commodity futures, options and ...

    How to Read Bar Stock Charts

    A stock bar chart is one of several types that investors use to visually analyze stock prices. A bar chart consists of a horizontal series of vertical lines, or bars, that each show a stock’s range of prices for a certain time period. Bar charts are widely available for ...

    What Was Done to Regulate Buying Stocks on Credit in 1929?

    Enthusiasm for buying stocks on credit reached the level of frenzy in 1929, and though many sounded the alarm, no actual regulations were in place. Investors put down as little as 10 percent to buy stocks. As long as stocks went up, such investors made money. When stocks ...

    Negatives of ETF Investing

    There are a lot of good reasons to invest using exchange-traded funds. The fund industry has developed ETFs to cover a very wide range of investment choices, making it easy to invest in some asset classes that were formerly out of the reach of individual investors. However, ...

    Opening Hours of the Stock Market

    When most people talk about "the stock market" they mean the New York Stock Exchange. It is the largest U.S. market and it tends to set the standard for all other trading systems. The American Stock Exchange and various regional exchanges followed NYSE hours, as did ...

    1929 Stock Market Recovery

    Wall Street lore and historical charts indicate that it took 25 years to recover from the stock market crash of 1929. However, some modern analysts dispute that view. In fact, the recovery from the low point, though not a steady climb, offered investors opportunities to make ...

    Ways to Manage Hedge Fund Risk

    Investors choose to place money in hedge funds to diversify their portfolios with assets that are not highly correlated to other investments. That’s the promise of a hedge fund -- to provide steady returns independent of other investments. In reality, hedge fund investors ...

    How to Pick Good Stock That Pays Dividends

    Stocks that pay you dividends have great appeal, but you have to make sure the stock can continue paying that dividend. You also need to know that the company issuing the stock has sound business practices and an effective business model, so that the company will last. Establish ...

    How Stock Price Value Affects a Company

    Dramatic changes in stock prices can influence a company to change its policies or practices. In addition, regulatory agencies, lenders and shareholders can demand company changes based on stock value. Company officers can initiate changes in company methods if they own shares ...

    Benefits of the Stock Exchange

    While stock exchanges are often associated with wealth creation and capitalism, they are much more than a place for brokers to buy and sell shares of companies. Stock exchanges allows businesses access to capital and the opportunity to enhance their visibility and public image. ...

    What Is "Stock Dividend Distributable"?

    Companies share their profits with shareholders by making cash payments called dividends. Once the company commits to make a dividend payment, it must record this future payment as an obligation in its books. "Stock dividend distributable" is the accounting entry for ...

    About Utah's 529 Educational Savings Plan

    Section 529 plans offer a tax-advantaged way for parents to save for their child's future education expenses. All 50 states offer at least one type of 529 plan. Direct-sold plans, like Utah's Educational Savings Plan, make it easy for parents to open an account and make ...

    How Does a Stock Split Affect the Performance?

    A stock split occurs when a corporation replaces existing shares with a new class of shares that represent a smaller ownership stake and are less valuable. Stock splits do not result in cash inflow or outflow for the corporation, nor do they impact the business prospects. ...

    How Many Years Can You Keep a US Savings Bond Before it Stops Earning Interest?

    U.S. savings bonds are safe and conservative investments, completely backed by the federal government. The Treasury now issues convenient electronic EE and I bonds on the TreasuryDirect website, but many older paper bonds are still paying interest. Investors often buy savings ...

    How to Trade the VIX

    To gauge the prevailing fear and dread among stock market investors, traders look to the VIX, formally known as the Chicago Board Options Exchange Market Volatility Index. An index of options prices that rises -- along with options values -- whenever market volatility is high, ...

    Types of Stock Market Orders

    Investing in stocks involves more than simply deciding that a company is a good investment. It requires knowledge of how stocks are traded and how to properly buy and sell to get the best deal. A stock order is an instruction to a broker to buy or sell a security, but ...

    Stock Market Points Vs. Percent

    On the financial news channels, they love to talk about points -- such as: "The Dow was up 50 points today." Unfortunately, points have a different value depending on whether someone is talking about stock indexes or share prices. Making a calculation to turn those ...

    Do Hedge Funds Have a Hurdle Rate?

    A hedge fund is a pooled investment available only to wealthy investors. Hedge funds attempt to provide high steady returns every year, regardless of market environments. They are compensated handsomely for this feat through a series of fees and restrictions. A hurdle rate, or ...

    Difference Between Stocks & Shares

    The terms "stocks" and "shares" often get used interchangeably -- and in most contexts, the difference between them is not significant enough to matter. If you own shares of a company, you own stock in that company, and vice versa. There is a difference, ...

    How to Choose a Hedge Fund

    Hedge funds cater to wealthy investors who seek steady, high income every year, with returns that are independent of individual market performances. Hedge funds are pooled investments that use a variety of unique strategies and tactics to make money. You can choose from among ...

    How to Buy Foreign Stock

    Investors can diversify their portfolio by adding foreign investments to their holdings. Purchasing foreign stocks directly from the home country’s exchange, investing in foreign stock mutual funds and buying foreign stocks listed on U.S. exchanges give investors exposure ...

    How to Invest Conservatively

    Investment volatility, or the rapid rate with which some investments gain and lose value, is undesirable for some investors, particularly those who are close to retirement age or will need the invested assets for another specific purpose soon. The risk of having to sell an ...

    Fixed Income Hedge Fund Strategies

    If you have ever contemplated investing in a hedge fund, you may know that there are many different strategies used by traders of these pooled investments. Fixed-income strategies involve debt instruments such as bonds and mortgages. Fixed-income hedge fund traders can use ...

    Do Par Designations Provide Any Indication as to Which Stock Is Preferable as an Investment?

    Comparing par values of different stocks isn't of any use as an investment guide. Although some states require companies incorporated there to issue stocks with a par value -- a minimum price -- the law doesn't require that the price reflect market value. Some states, such as ...

    How a Reverse Stock Split Works

    A company uses a reverse stock split to give an instant increase to the company's share price. Low-priced shares are often ignored by institutional investors, and if a stock's price falls too low, it can be delisted by the stock exchange. A higher share price can boost a ...

    Stock Market & Financial Terms

    Stock investors use industry-related terms and phrases to discuss many aspects of the market and investments. Articles, studies, and laws related to the stock market are often saturated with jargon. An understanding of basic terminology related to the market and financial ...

    What Are Stock Market Mid Cap and Small Cap Indexes?

    Stock market indexes track the changes in the share prices of certain classes of stocks. Financial media tend to lavish attention on indexes that track the biggest stocks, such as the Dow Jones industrial average, S&P 500 and Nasdaq 100. But thousands of small- and ...

    How to Choose Saving Bonds

    U.S. savings bonds are a favorite investment choice for people seeking reliable interest income. The Treasury Department in 2012 offers Series EE and Series I savings bonds. The interest earned is tax free on the federal level, and the bonds can be redeemed after a 12-month ...

    Debt Lender vs. Equity Investor

    You have two basic options when it comes to investing; you can be an owner or a loaner. Owners invest in equities, such as stocks, while loaners put their money out at interest, for example by investing in bonds or certificates of deposit. Both investing strategies offer ...

    What Is LIBOR in the Stock Market?

    LIBOR, the London Interbank Offered Rate, is the interest rate that banks offer other banks on the London financial market, which is used by many of the world's largest borrowers. LIBOR is not part of the stock market or directly related to it. However, it does affect stocks in ...

    How Are the Prices of Stock Set on the NYSE?

    Prices of securities on the New York Stock Exchange are determined in an auction process that matches orders to buy with orders to sell. Stock prices essentially are set by supply and demand. An abundance of "buy" orders causes a stock's price to rise; an excess of ...

    How to Buy an Option to Purchase Stock in Future

    You probably want to buy a particular stock because you believe the market price will increase, giving you a nice capital gain. But there are a lot of factors that can impact a stock's price, and not all of them are positive. If you buy stock today, there is no guarantee that ...

    How do I Compute Bond Equivalent Yield & the Effective Annual Rate?

    Money has time value, and it’s called interest. When you earn interest, you have the opportunity to reinvest it to earn even more interest – that’s called compounding. Effective annual rate is the actual annual rate you earn on debt that compounds more than ...

    How Does Futures Trading Work?

    Futures trading offers a wide range of asset classes, active markets with tight spreads and low trading costs, and significant levels of leverage that provide the potential for large profits on a relatively small amount of trading capital. But there's a potential for serious ...

    Can a Bank Invest in a Hedge Fund?

    The U.S. mortgage crisis of 2007-2008 led to a financial meltdown that required federal intervention to save the nation’s biggest banks from failure. The ensuing political furor led to the passage of the Dodd-Frank Reform and Protection Act of 2010. One of the act’s ...

    How to Find the Number of Shares of Stock on an Income Statement

    When you own stock in a company, it is important to keep track of its number of shares outstanding, which is the number of shares all investors own. This affects your stake in the company and your piece of its profits. You can find two different measures of shares outstanding on ...

    Where Did Triple Witching Come From in the Stock Market?

    Triple witching hour is stock market jargon for a one-hour period in the stock market schedule when price volatility can be extreme and unpredictable. Investors should understand that what happens during triple witching hour doesn't indicate future market troubles, and traders ...

    What Are Net Worth Requirements for a Hedge Fund?

    Hedge funds are organizations that manage pools of investments on behalf of clients using aggressive techniques and complex financial instruments. Individual hedge fund investors must be accredited, as defined by Rule 501 of the Securities and Exchange Commission’s ...

    What Is the Most Basic Factor That Affects Stock Price?

    When you buy a share of stock, you are actually buying a tiny piece of the company. Each share of stock represents an equal level of ownership in the company, and the more shares you own, the greater your percentage of ownership. Whatever your reason for buying stock in a ...

    Direct Purchase Stock Investments

    Many companies allow investors to buy their shares though direct stock purchase plans, called DSPPs. Investing through this type of plan avoids having to open a brokerage account and pay commissions to buy that stock. Each company determines the investment amounts and fees for ...

    The Effect of Deflation on the Stock Market

    Deflation occurs when the amount of currency in circulation is reduced and currency increases in its buying power. In short, the purchasing power of money increases. The inverse of inflation, under deflation it takes less money to buy the same amount of goods and services. ...

    How to Stop Loss in Stock Trading

    One of the basic tenets of stock trading is to preserve your trading capital by limiting the size of losses on your losing trades. Not every trade is a winner, and even a small number of big losses can make it difficult to offset those losses with winning trades. A practice of ...

    How to Replace Lost Bonds

    Sometimes you can’t find a lost savings bond or corporate bond no matter how hard you look. You can get the bonds replaced by contacting either the Department of the Treasury or the corporation that issued the bonds. With just a little bit of information, the bonds can be ...

    How to Calculate How Much Money an Investment Will Earn Over Time With Revolving Interest

    If a constant interest rate acts on your investment, you can calculate your returns with a simple formula. You can similarly calculate your returns if the interest rate grows continually or if the interest rate follows a mathematical function. But if the interest revolves ...

    What Does Price Earnings Mean?

    The p/e or price/earnings ratio is a valuable bit of information investors use in analyzing stocks. It shows the relation of a company's stock price to its earnings, or profits, and serves as a good gauge to compare company stocks. The p/e has been generally available since ...

    What Is Considered an "Open Security Position" at a Hedge Fund?

    An “open security position” refers to an active trading position. A position is opened when it is established – for example, by purchasing 100 shares of XYZ Corp. A hedge fund can partially or completely close the security position by selling some or all of the ...

    How Does Canceling Out of a Futures Contract Work?

    A futures contract sets a forward, or future, price of an underlying commodity or financial instrument. Futures trade on exchanges, are highly standardized, and can be settled for cash or physical delivery. Physical settlement requires the contract buyer to accept delivery from ...

    How to Hedge Long Equity Exposure Cheaply

    If you own equity shares, a stock mutual fund or an index exchange-traded fund, you have long equity exposure; that means you can lose money if the stock market goes down. “Long” signifies that you have purchased a position in some kind of asset -- in this case ...

    How to Get a Rating for Bonds

    Investors worldwide rely on Moody’s, Standard & Poor’s and Fitch for unbiased bond ratings. All three services are certified by the U.S. Securities and Exchange Commission as Nationally Recognized Statistical Rating Organizations. These agencies post corporate, ...

    How to Make Money Buying Bonds

    If you're in search of regular income from your investments, bonds might be the answer. A traditional bond pays interest every six months, at an interest rate set by the issuer. U.S. Treasuries, backed by the credit of the federal government, are considered the safest form of ...

    How Investment Bankers Help Organizations Go Public

    Businesses can't enter the public stock markets without the involvement of investment banks. By collaborating with bankers, corporations can determine the most effective timing, value and overall size of a new stock issue. Investment bankers are involved from the beginning of ...

    The Advantages of Bond Funds

    Companies and government organizations that need money sometimes sell bonds instead of taking out traditional loans. When you buy a bond, the seller pays you interest until a maturity date, at which time it pays back the original cost of the bond. Bond funds are professionally ...

    How to Measure FOREX Pips

    In the foreign exchange market, the percentage in points refers to the smallest unit of a currency price and is equal to 0.0001. One exception is for the Japanese yen, which is quoted only to the second decimal point. Pips are also sometimes referred to as points and are useful ...

    Dividend-Based Investing

    When many novice investors think about investing in stocks, they dream of putting their money in a tiny company whose stock price skyrockets quickly. But don’t overlook dividend stocks as part of your portfolio. They don't demonstrate explosive growth in prices, but the ...

    Who Buys Stock That Is Sold on the Market?

    A stock market functions to match buyers and sellers. Every time someone sells stock, there is a buyer on the other side of the trade who wants to own that stock. It can be difficult to understand why someone else would want to buy the stock you are selling. The movement of ...

    Is a Bank IRA Covered by the FDIC?

    Americans have many choices for their Individual Retirement Accounts, including stocks, bonds, mutual funds, mortgages or even real estate. IRAs in banks belonging to the Federal Deposit Insurance Corporation are a conservative option for investors concerned about safety. IRA ...

    Investment Funds That Buy Mortgage Pools

    Pools of mortgages are the collateral behind mortgage-backed securities -- MBS. Mortgage-backed securities are a major component of the bond market and many bond funds will have a portion of holdings in MBS. There are also funds, of all fund types, that only invest in mortgage ...

    Relationships Between Savings & Long-Term Economic Growth

    Compared with people in other industrialized nations, Americans do not save a lot of money -- something on the magnitude of 4 percent or 5 percent of their incomes on the average. Although saving is a habit we are all instructed to make as children, we seem to fall short as ...

    How to Invest in Barrels of Oil

    Trading barrels of oil can help diversity your investment portfolio. Oil is a volatile commodity and investors can profit from its price moves. Depending on individual risk/reward tolerance, investors can trade barrels of oil using commodity futures contracts, options and ...

    What Drives Stock Market Cycles?

    Bull markets and bear markets are secular cycles. They are long-term -- often continuing for 10 years or longer. Inside the secular cycles are short-term reversals and sector rotation. At the beginning of a bull market, financials, technology and consumer goods outperform. In ...

    Tips for New Penny Stock Investors

    Penny stocks can be attractive for new investors due to their low prices and promises of high returns. However, just as penny stocks can make investors money, they can also cause losses. This is especially true for new investors who don't have a thorough understanding of how ...

    How to Read a Stock Market Line Graph

    Investors use stock charts, or graphs, to evaluate the price behavior of stocks, exchange-traded funds and other financial instruments. A line graph is the simplest and one of the most common types of stock charts. You might find one in the business section of the newspaper, on ...

    Can One Invest in Stocks & Bonds on One's Own?

    It is very possible to invest in stocks and bonds on your own, and getting started is not very difficult. The challenges to do-it-yourself investing lie in developing a plan and determining which stocks and/or bonds are the ones to buy to meet your investment goals. Successful ...

    Alternative Investment Assets

    Alternative investments are those generally not correlated to traditional investments, such as stocks and bonds. Assets are deemed "alternative" because of their nature, which is to respond to factors other than those that drive stock market prices. Instead, ...

    The Disadvantages of Income Investing

    For all of its benefits, income investing does have some drawbacks that investors should prepare for. Investing offers no guaranteed returns, and financial securities that produce income are no exception to that rule. If that steady stream of payments abruptly stops, investors ...

    What Are the Components of the Yield to Maturity?

    Of the several different ways to calculate the yield of a bond, yield to maturity gives the most accurate indication of what an investor will earn if a bond is purchased and held. The other types of bond yields provide the building blocks and an understanding of what the yield ...

    Things Affecting the Stock Market

    A host of factors affect stock market activity. Some of them, such as domestic or international economic conditions, are broad in nature. Others may be industry or company specific, such as the success of products, clinical trial results or sales performance. The amount of ...

    Understanding Short-Term Government Bond Funds

    If you have a strong aversion to risk but you aren't enthralled by the minuscule returns offered by your bank savings account, you might consider dipping your toes into the the U.S. government bond market. You can start slowly by investing in a short-term government bond fund. ...

    Signs of a Stock Market Collapse

    A stock market collapse is something that every investor wants to avoid. However, a collapse is historically inevitable, and it's not partial to sectors or individual companies. Once a market collapse occurs, it can take months or years for investors to recover losses. Luckily, ...

    How to Redeem Stocks in a Trust

    When someone dies after placing stocks in a trust, the securities must remain untouched during the trust administration. After the decedent’s financial obligations have been met, the trust is ready to distribute the remaining assets. Any paper stock certificates must be ...

    Types of Stocks & Bonds

    While stocks and bonds are two completely different asset classes, some features are common to both. Choosing the best stocks and bonds to invest in is a challenge, considering the size of the financial markets, where trillions of dollars worth of securities are traded. ...

    How to Trade Nasdaq 100 Options

    The Nasdaq 100 stock index tracks the value of the 100 largest nonfinancial companies listed on the Nasdaq stock exchange. Because the main components of the Nasdaq 100 are some of the largest U.S. technology companies, this stock index can be used to trade the tech sector of ...

    Does Preferred Stock Usually Pay a Fixed Dividend?

    Most preferred stocks pay fixed dividends guaranteed by the terms under which the shares are issued. Preferred stock is sometimes labeled a “hybrid” security, because it combines ownership like common stock with regular income like a bond. If you are an ...

    Cumulative Preferred Stock Vs. Non-Cumulative

    Preferred stock is an important funding source for the issuing corporation and a relatively safe investment alternative to common stock for the investor. Regardless of whether it is cumulative or non-cumulative, all types of preferred shares enjoy priority over common stock. ...

    When Do Bond Funds Distribute Income?

    Bond funds offer you the opportunity to establish a steady income stream from your investments. According to "The Wall Street Journal," funds that hold bonds that mature in five to 10 years pay 2 percent to 3 percent of your investment as income annually. Funds with ...

    Can Inflation-Protected Treasuries Be in an IRA?

    The U.S. Treasury's inflation-protected securities -- TIPS -- are a very suitable investment for an individual retirement account. Inflation-protected securities in an IRA would make sure the account's value kept up with inflation. An IRA account with a brokerage firm would be ...

    The Pitfalls of Tax Lien Investing

    With about $7 billion in unpaid tax liability per year, tax lien investing sounds almost too good to be true: buy up the rights to collect back-due property taxes, and either receive a high-rate of interest -- up to 24 percent a year -- or the title of the property if the ...

    Types of Stock Market Analysis

    Stock market analysis is crucial because it influences the choices investors make, sometimes to very high degrees. A wide range of stock market analyses is available to investors. Not all of them are useful, and some can be detrimental or even fatal to investors. An awareness of ...

    When Should I Bonds Be Bought?

    You have a choice between two types of U.S. savings bonds. You can invest in Series EE bonds or Series I bonds. Both types of savings bonds are backed by the full faith and credit of the United States government, both are sold at face value and both offer the option of deferring ...

    Are Foreign Stocks Important to a Portfolio?

    Within the next few years, the United States might no longer be the leading economy in the world. The economies of other countries, including China, Indonesia, Turkey, Argentina and India, are growing faster. Between 2000 and 2010, annual growth in U.S. gross domestic product ...

    Relationship Between P/E Ratio & Stock Price

    While a company's stock price reflects the value that investors are placing on that investment, the price-to-earnings ratio, called P/E ratio, illustrates a stock's worth based on current or future profits. A stock that is fairly valued should have a P/E ratio that justifies its ...

    The Value of US Series E Savings Bonds

    Although series E bonds were the mainstay of U.S. savings bond sales starting in the World War II era and going for almost four decades, the E bonds were replaced by series EE bonds starting in 1980. If you own some old series E savings bonds, the U.S. Treasury provides some ...

    How Do Bond Yields Affect Currencies?

    Bond yields play a significant role in determining the direction of a currency. The difference between one countries bond yield and another countries bond yield, known as an interest rate differential, is more influential on the direction of a currency than the actual bond ...

    How to Invest $1,000

    When you have $1,000, you have crossed an interesting threshold in investing. For example, an online brokerage that charges $10 per trade will charge that fee no matter how much you invest. That means if you only invested $100, your trading fee would come to a hefty 10 percent. ...

    How to Invest in Derivatives

    Derivatives are financial instruments one step removed from the underlying security. Derivatives are alluring to new investors because they require less money upfront to trade and are highly leveraged. Even a small price move can quickly increase or decrease an investor’s ...

    How to Measure Volatility of Mutual Funds

    A mutual fund’s net asset value, or price per share, is based on the prices of its underlying securities, such as stocks or bonds. Volatility is the extent to which a fund’s net asset value typically fluctuates. With all else being equal, a highly volatile fund has ...

    How to Buy IPO Shares

    The investment banks that underwrite an IPO typically allocate shares to their favored clients, who jealously guard every share. You can open a brokerage account if you're wealthy enough, but there’s still no guarantee of getting in on an IPO. Investors need to evaluate ...

    How to Find Out How Much Your Shares Are Worth

    Day-to-day stock price fluctuations can cause panic in the most stable of souls. Even if you're not obsessive about monitoring your investments, it's a good idea to check in on their progress at least every few months. Although you can get real-time stock quotes during the ...

    How to Find the Common Stock on a Balance Sheet in Accounting

    Common stock tells you a lot about a company. To get the book value of a single share of stock, for instance, you divide the total value of the common stock by the number of shares. If the company issues only common stock, with no preferred shares, then common stock equals the ...

    Is the Stock Market Closed During the Weekend?

    Although an old adage declares that business never sleeps, business certainly isn’t above taking some time off, particularly on weekends. The New York Stock Exchange and Nasdaq, the nation’s largest stock markets, maintain hours of trading that are similar to those ...

    How Is Stock Market Volume Calculated?

    The two most fundamental figures in the stock market are price and volume. The financial press reports trading volume for individual stocks and for the market as a whole. Many keywords you will come across in the financial news media, such as liquidity and shallow or deep ...

    Does the Bid-ask Spread Affect the Performance of ETFs?

    Of the different costs involved with trading or investing in exchange-traded funds, the bid/ask spread may be the most misunderstood or even ignored. The effect of the bid/ask spread on your investment results depend on several factors including the ETFs you choose to trade and ...

    How Emotion Works on the Stock Market

    Emotion is ever present in the stock market. Feelings do not discriminate among amateur and professional investors despite the fact that some people have more practice than others at keeping their emotions in check when making financial decisions. Nonetheless, positive and ...

    Hedge Fund Side Letter Agreements

    Hedge funds are organizations that pool and invest client money using aggressive techniques and complex financial instruments. Clients must sign a partnership agreement with a hedge fund before they can invest. A partnership agreement specifies all the rules controlling ...

    How to Hold a Call Option

    Call options represent control of 100 shares of a certain stock. Their value is derived from the underlying stock. Options trade in contracts. Thus, if a call option contract trades at $5 and you buy 10 contracts then the actual cost is: $5 times 100 times 10 equals $5,000 plus ...

    How to Calculate Interest Payments When Monies Are in Lump Sums

    Many payment plans let you choose between receiving a series of periodic payments or a single lump sump. Though the lump sum gives you your money upfront, the separate payments offer you more money in total. Yet the lump sum can offer you more in the long term, because you can ...

    Why Do Bond Prices Go Up When Stock Prices Fall?

    As part of the delicate mechanism of global finance, bonds and stocks are two well known investment opportunities. Their relative values indicate the mood of the market, and by extension, the measure of confidence in an economy. There are reasons why as one investment option ...

    Explanation of Dividend Yield Stocks

    Stock shareholders can make money on investments in two ways -- through capital gains and dividends. Capital gains are profits you make when selling a stock that has increased in value, while dividends are payments companies make to shareholders from corporate earnings. ...

    The Determinants of Mutual Fund Performance

    According to 2010 U.S. census data, there were nearly 7,600 mutual funds with $11.8 trillion in assets. As an investment vehicle, a mutual fund provides the benefit of affordable access to a professionally managed and diversified portfolio of securities. When choosing one to ...

    Stocks & Shares Terminology

    Investing in the stock market can be intimidating to investors who are unfamiliar with industry jargon. The percentages and numbers that make up stock tables are a language, and investors must develop fluency in this language to make wise investment decisions and avoid becoming ...

    What Is Buying a Put in the Stock Market?

    An option is a financial product that allows you to control stock for a time without giving you any ownership in that stock. The two kinds of options are puts and calls. Each option controls 100 shares of the underlying stock. A call option gives you the right to buy the stock ...

    How to Execute a Call Option

    A call option is a contract that allows you to buy some assets at a fixed price called the strike price. In the case of a stock option, the call controls 100 shares of stock until it expires. To execute a call, you first must own one. The purchase price of a call is called the ...

    How to Invest After 55

    When it comes to investing, time is your greatest ally. Time allows the power of compound interest to be fully realized. If you have enough time, your portfolio can recoup losses from a down market. The stock market has produced positive 10-year returns in 67 of the 74 10-year ...

    Dow Vs. Nasdaq Vs. S&P

    Daily reports of stock market activity often refer to the Dow, the S&P and Nasdaq. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite Index use selections of representative stocks to measure stock trends. Together, these indexes provide a snapshot of ...

    Describe Stock Market Buy Limit

    The investments industry, like most professions, has its own jargon. Although certain investment terms might sound similar, they can have very different meanings. When it comes to placing a buy order, you have several choices. You can place a market order or a limit order. ...

    Is There a Relationship Between Bonds & the Stock Market?

    A company may issue both stocks and bonds, and these two types of offerings can reflect the company's financial health. Investors put their money in both the bonds and the stock of a profitable company, and they shy away from buying bonds and stocks of a struggling company. For ...

    How Can I Practice on the Stock Market?

    When you start investing in the stock market, you put some of your hard-earned money at risk. If you do not have much investing or trading experience, it would be nice to practice first before putting real money into the market. Fortunately, the Internet provides plenty of ...

    Outstanding Callable Bonds Vs. Non-Callable Bonds

    Bonds are a form of debt issued by governments and corporations to raise money. Lenders purchase bonds to receive interest income and the eventual redemption, or return, of the bond's face value on the maturity date. However, bonds may be issued with one or more embedded calls. ...

    What Is a Closing Order in the Stock Market?

    The term "closing order" can have a couple of different meanings in stock market trading. One meaning refers to a specific type of order, and another is a way to verify your purpose for placing an order. The second meaning is the more commonly used of the two. Using ...

    How to Invest in Green Technology Stocks

    Green technology is undergoing a shift from being for the environmentally conscious to those who are cost conscious with a long view of the future. If something is renewable, it can have stability in price and is not a diminishing resource. Investing in particular types of ...

    How to Account for a Dividend Reinvestment

    Although companies often pay their shareholders quarterly cash dividends, shareholders can choose to have their dividend payments reinvested. When that happens, shareholders receive additional shares of stock instead of cash. The Internal Revenue Service classifies reinvested ...

    Tips on Day Trading Stocks

    "Day trading" stocks is the common term for selling shares of stock on the same day they were bought. A trader who makes than the occasional same-day stock transaction will fall under a different set of day trading rules from the Securities and Exchange Commission. Day ...

    Basic Stock Market Indicators

    Stock market indicators give an idea of the mood of the market and its potential direction. Depending on current economic conditions, they tend to change as broad investor concerns change. Stock market indicators are slightly different from economic indicators, which move the ...

    Sectors That Make Up the Dow Jones

    "The Dow" and "the market" are often used to describe fluctuations in the prices of company stocks. Both originated with the New York Stock Exchange, which for decades was the dominant stock trading system. Today both incorporate other aspects, such as the ...

    Private Vs. Institutional Investors

    Whether you are learning about personal investing or seeking investment dollars for your company, you should know the difference between private and institutional investors. Institutional investors are typically banks, pension funds, insurance companies, and hedge and mutual ...

    Are There Dividends Paid to the Holder of Treasury Shares?

    Treasury stock is a broad term in finance and encompasses all kinds of stock purchased by the issuing company. Corporations buy back their shares for a variety of reasons. Such "buybacks" reduce the company's dividend expense and save money over the long run.

    Characteristics of a Low-Risk Stock Portfolio

    Low-risk stock portfolios can differ from one another in precise composition, but they are likely to exhibit some similar characteristics. Those features separate lower-risk equity securities from riskier stocks. These qualities are meant to protect an investment portfolio from ...

    Types of Stock Market Indicies

    Stock markets are exchanges in which stocks are publicly listed and auction-traded. A stock market index tracks the prices of the stocks included in the index and summarizes the prices in a single average. There are many types of stock indices, which can be characterized by ...

    The Effect of Monetary Policy on the Price of Stocks

    Monetary policy can affect stock prices in either a positive or negative fashion. While there is some logic attached to the way that the stock market responds to policymakers, the reactions of investors can also be surprising. The changes that policymakers initiate in the ...

    How to Calculate Commission on Stocks

    Whether closing out a trade with a profit or loss, you always pay a broker commission. Investors can choose between online full-service firms that offer stockbroker trade assistance and advice or go with a no-frills do-it-yourself platform. Investors need to compare commission ...

    P/E Ratios for the Dow Jones Industrial Average

    The Dow Jones Industrial Average tracks the share price changes of 30 major U.S. companies. The price-to-earnings, or P/E, ratio of the Dow is the total adjusted annual earnings of the 30 stocks divided into the current value of the DJIA. The P/E ratio changes over time, but ...

    Treasury Bond vs. Certificate of Deposit

    Treasury bonds and certificates of deposit are two ways to increase earnings and diversify your investment portfolio. Each type of investment requires the purchaser to loan money to the issuer for a specified period of time. In return, the investor receives interest on the held ...

    How to Report a Fractional Share Payment From a 20-to-1 Stock Split

    Companies can improve their stock price through a reverse stock split. But the split rarely results in an even exchange, and companies don't want to have thousands of fractional shares on their books. Instead, each shareholder receives a cash payment in lieu of the fractional ...

    How Do I Take Advantage of a Low Stock Market?

    The problem with a stock market slump is it creates a negative atmosphere. Investors tend to be sour over having lost money; some even panic and the news seems to tout the end of stock market profits with every headline. That's when seasoned investors buy. Knowing when to buy ...

    Actual Stock Buying Vs. Stock Covering

    Occasionally you might hear about a stock that will undergo serious covering in a short amount of time while there are few to no sellers to supply the shares. This is referred to as a short squeeze. This is one of the few events where stock covering really becomes noticeable and ...

    Does a Preferred Dividend Have to Be Paid?

    Preferred shares of a company's stock entitle the owner to a fixed, annual dividend payment that is contractually set. The reason these shares are referred to as preferred stock is that the failure to pay these dividends has far-reaching consequences for the firm's stakeholders, ...

    Stock Market Theories

    Successful investing depends on correct predictions about the movements of the market, both as a whole and in its component parts. There is no foolproof way to successfully predict market behavior, which is why there is still no consensus on market theories. However, an ...

    Ways to Hedge Interest Rate Risk of Preferred Stocks

    Preferred stock is a form of equity offering relatively high dividend payments compared to those available from common stock. The dividends on preferred stock compete directly with bond interest for investors seeking steady income. If interest rates rise, the value of competing ...

    Is Whole Life Insurance a Good Investment?

    Your finances are made up of more than just your paycheck and your bank account. Your investments, retirement accounts, debt obligations and insurance policies also play a significant role. In some cases, you might combine elements of more than one financial category. For ...

    INDU Stock Market Explained

    The Dow Jones Industrial Average is the most watched market index and one of the three components of Dow Theory -- an early market prediction tool and still a standard of the financial industry. Like common stock, market indexes have ticker symbols. INDU is a ticker symbol used ...

    Does the Settlement Date Have to Occur Before the Ex-Dividend Date to Receive a Dividend?

    Shares of public corporations change hands very frequently; often several times a day. However, these companies only pay dividends once, twice or four times a year at the most. Therefore, there are strict rules to determine who, among the stock's various owners throughout the ...

    How to Choose Bond Funds

    Professionally managed bond funds can diversify your portfolio and provide you a steady stream of interest income. Shareholders have the options of receiving their interest payments in cash or reinvesting them. Managed bond funds can hold corporate, municipal and government ...

    How to Figure Sales on Income Statement With Total Shares Outstanding & Earnings Per Share

    A company's earnings per share can help you gauge its performance, but investors often consider other information. When a company's earnings rise, it may be doing well, or it may have seen high profits by laying off workers or otherwise cutting costs. The company's revenues or ...

    Correlation of Stocks & Bonds

    When interest rates fall, existing bonds pay higher interest than new bonds coming on the market. The higher-interest bonds go up in value because investors will pay more to get their better rate. Falling interest rates promote rising stock prices as well, because companies keep ...

    What Is the Toronto Stock Exchange Act?

    The Toronto Stock Exchange was organized in 1861 when 24 men gathered in a Toronto Masonic Hall and agreed to trade shares. No more than a handful of shares in real estate and banks were traded during that time. In 1878 the Ontario legislature passed the Toronto Stock Exchange ...

    Long-Term Stock Market Trends

    It's easy to get caught up in the emotions of stock market fluctuations. An investor can lose sight of long-term trends. If you want to consider a really long-term perspective, here's an interesting fact: Since 1871, the stock market has never been in a long-term downward trend. ...

    The Theory of Stock Market Efficiency

    The goal of every stock market investor is to do better than the averages. According to the efficient market theory, you can't. The hypothesis suggests that stock prices reflect the average value that investors place on the stock. The idea is that there are so many investors ...

    The Dangers of Short Selling Stocks & Bonds

    "Short selling" seeks to profit from downward price movements. When you short sell shares or bonds, you first borrow them for a fee from a lending broker. You then sell the borrowed securities, and the sale proceeds are deposited in your brokerage account. Sufficient ...

    How Often Do Stock Market Bubbles Happen?

    The end of a stock market bubble is one of the worst things that can happen to any portfolio. A stock market bubble is when the stock market rises rapidly and for seemingly little reason. It is mostly a subjective description that signifies that the stock market is inflated like ...

    Is an IRA Considered a Security?

    If you own an individual retirement account, you may have stocks, bonds, cash and mutual funds in it. Perhaps you've heard these investments lumped together under the term "securities." If someone asked what securities you own, you could list your investments. You'd be ...

    How to Invest Monthly

    When you open a investment trading account, even with a discount broker, you pay for each trade. You might pay around $10, for example. Let's say you invest $100 per month, at $10 per trade, your fee equates to a 10 percent surcharge. You can save on expenses, however, with a ...

    Bond Inflation Strategy

    Inflation is a general increase in the prices of goods and services. Because inflation destroys buying power, bond investors require higher returns to maintain the value of their incomes. As interest rates rise, the prices of existing bonds decline, because their lower interest ...

    How to Calculate the Weighted Average Life for Bonds

    Many bonds pay their principals as a single sum when the bond matures. Other bonds amortize their principals by paying their principals in installments over the course of the bond's life. With these bonds, investors like to receive their returns as soon as possible. The bond's ...

    What Is a Corner in the Stock Market?

    Cornering the market is a type of stock manipulation. The goal of the trader attempting to corner the market is to drive the price of the stock to a new high, and then take profits. The trader accomplishes this by accumulating shares, a little at a time, until he owns a majority ...

    How to Buy Casino Stock

    Gamblers might win a few hands of poker, but the house always comes out on top. The recession hit the gambling industry hard, but recently, it has shown strong signs of recovery. Traders who would rather not risk their money on a turn of the roulette wheel can still take ...

    How Is Total Return Used to Price Stocks?

    Investors want to understand factors that impact stock prices. The dividend discount model provides a very useful conceptual framework for understanding how a stock price is related to its expected total return. It says that a stock price is equal to the discounted value of its ...

    Dow Jones Precious Metals Index Components

    The Dow Jones Precious Metals Index, ticker symbol DJGSP, tracks the largest U.S.-listed or American depositary receipt gold, silver and platinum mining and exploration companies. The companies are categorized into either the gold mining sector or the platinum and precious ...

    What is a Limit Order in Stock Trading?

    A stock brokerage account gives you more ways to trade stocks in addition to either buying or selling at the current market price. Alternate types of stock market orders -- such as limit orders -- give you more control over the prices at which you buy and sell stock shares. ...

    How to Report the Sale of Mutual Fund Shares

    Mutual funds are designed to eliminate some of the risks inherent in trading individual stocks. A mutual fund’s trading price changes only if enough stocks in the portfolio increase or decrease in value. Whether an investor sells at a profit or loss, the transaction must ...

    Cyclical Trends in the Stock Market

    Recurring themes or trends attach themselves to different cycles in the stock market. Stock prices trend lower in some cycles and higher in others. Market cycles can linger for years or be condensed into a number of months; they can even be a harbinger of broader change in the ...

    Successful Stock Market Trading Strategies

    Successful trading strategies can help investors uncover profitable opportunities in the markets. By applying proven stock market strategies, the average investor can take advantage of some of the methods used by professional traders and participate in those gains. Even the most ...

    The Relation of Interest Rate & Yield to Maturity

    Some bond-related terms are used as synonyms, which can make investment jargon confusing to a new bond investor. The yield to maturity and the interest rate used to discount cash flows to be received by a bondholder are two terms representing the same number in the bond pricing ...

    Oil Companies That Trade on the Stock Market

    Of the 500 large companies included in the S&P 500 in the U.S., 11 percent of the total market value comes from energy sector companies. Depending on how you define oil companies, there are 50 to 100 oil company stocks trading on the U.S. stock exchanges. The types of oil ...

    Do Alternative Investments Generate Alpha Returns?

    Whether or not any fund or investment strategy generates alpha returns is an open question. In a large part, it depends on how alpha is defined. If beta-risk is well-defined and accurately measured, then in efficient markets, alpha will be hard to find. That said, alternative ...

    Good Investments for Asset Protection

    Protecting your investment money from losses while generating desired profits is the ultimate challenge. You also have to beat inflation. If you simply lock your money away with no growth at all, the cost of living might rise and your money can suddenly be worth less. You have ...

    How to Invest in Stocks Wisely

    If you look up the word "wise" in the dictionary, the definition usually includes concepts such as the application of knowledge, careful consideration of the question at hand, and judgment based on a combination of the above. In fact, the definition closely resembles ...

    How to Give a Certificate of Deposit to a Minor

    A certificate of deposit (CD) is a safe way to invest money. You loan money to your bank, which then lends it to other people, and in return, the bank pays you interest. The interest rate is relatively low compared with other investment options, but the investment is very safe. ...

    What Is R-Squared Investing?

    R-squared, or R2, investing is a method of evaluating the relationship between two series of events. Most often, it describes the relationship of a security's market movement and the movement of a relevant index or benchmark. R2 is an effective tool in identifying the ...

    How to Calculate the Value of Reinvested Dividends Using Excel

    When you reinvest dividends into a new fund, you purchase additional shares that earn dividends of their own. The fund's rate of return now acts on a continually growing principal, producing increasingly large dividends. You can calculate your total profit from reinvesting using ...

    What Do I Do if the Price of the Stock That I Sold an Option on Goes Above the Strike Price?

    Selling call options against shares of stock you hold is called covered call writing. You receive income from selling the call options, but are obligated to deliver the shares if the buyer decides to exercise the calls. The call-option details include the stock price at which ...

    How to Compute Bond Yields

    Bonds are issued with a par value and a stated interest rate, which are used to calculate how much interest the bond pays each year. However, when bonds are traded, they often sell for a price different from the par value because the stated interest rate is different than the ...

    Backwardation of Gold Futures

    Backwardation is a condition in the futures market used to describe when futures contracts with a future delivery date are priced lower than the current spot price of the underlying commodity. The nature of the gold markets make it difficult for backwardation to occur, so when ...

    What Is Relative Price-to-Earnings Ratio?

    Investors require metric information by which they can judge the attractiveness of investing in a specific company. The price-to-earnings ratio, which is stock price divided by annual earnings, is a very important metric, as it reveals how much investors have been willing to pay ...

    What Does Beta Measure in the Stock Market?

    Beta is an important concept in stock market analysis factors. It measures the correlation of a stock versus an index or the market as a whole. Beta also incorporates the volatility of a stock or an entire portfolio, providing valuable data to investors and analysts. Beta ...

    What Is a Moving Average in Stocks?

    Investors and traders use technical indicators to look for trends and reversals in stock prices. Moving averages are a type of technical indicator that is plotted on a stock price chart. Moving averages can help you see longer-term trends within the volatility of the daily ups ...

    When Are Contrarian Profits Due to Stock Market Overreaction?

    Buyers and sellers often move as a pack, using each other's behavior as the basis for their own. Frenzied buying and selling drives prices up or down quickly, and when investors realize their mistake, the price reverts to its old levels. Contrarian investors watch for such ...

    Types of Stock Market Anomalies

    The stock market sometimes deviates from its usual behavior. This is called an anomaly. Some anomalies come and go quickly, and others happen just frequently enough to frustrate the rational investor. Some of the most common anomalies present intriguing trading opportunities and ...

    Is There a Virtual Stock Market to Practice Trades?

    There is no lifeguard when it comes to using real money in the stock market. Jumping into the deep end opens you up to all the risks that come with not knowing what you are doing. Practicing is one of the best ways to get the hang of all the complexities of trading in the stock ...

    How to Buy a Covered Call

    The covered call strategy uses shares of stocks and stock options to generate an attractive level of income into your brokerage account. A covered call consists of two parts: buying stock and selling call options; an online brokerage account allows you to open a covered call ...

    Why Is the Debt Vs. Equity Issue So Important?

    An investor’s desire for high returns is tempered by the amount of risk the investor is willing to assume. Debt versus equity addresses this tension directly. Debt can be used to lever up earnings, but when overdone can lead to bankruptcy. The trick for companies and their ...

    How Do I Exit Stock Options Buy Back?

    For every option trader placing a buy order there has to be a trader willing to take the sell side. Option buyers pay out money to open their trades but option sellers receive money, which is known as the option premium, to accept the risk of holding an option short. When the ...

    The Mutual Funds That Invest in Rare Earth Metals

    The 17 rare earth metals, except for promethium, are not rare but are so named because they typically aren’t found in concentrations that support profitable mining operations. The elements have various technical applications, from advanced batteries to electronics. China ...

    When Does the Stock Market Show Losses & Gains?

    Stock prices change frequently throughout the course of a trading session as investors absorb various events unfolding in the economy and stock market. It may seem surprising that one piece of information or a single event can fixate investors in the equity markets where ...

    How to Invest in an Economic Slump

    Every economic environment presents investment opportunities. The problem with a slump is you can't use the same strategies you use during growth periods. In fact, you may have to consider some investment approaches you previously rejected. If you believe a slump won't last ...

    Risks of Buying Stocks Compared to a Treasury Bill

    Both stocks and Treasury bills allow investors to earn a return on their investment to help meet financial goals, including retirement. When you buy a share of stock, you are purchasing a share of ownership in a company. When you buy a Treasury bill, you are making a loan to the ...

    Characteristics of Alternative Investments

    Alternative investments are generally more complex and obscure than traditional modes of investment such as banks, stocks, bonds, mutual funds or physical assets such as real estate. Alternative investments are vehicles not commonly sold to the everyday investor and can include ...

    Dow Jones Industrial Average Price to Earnings

    The price to earnings -- or P/E -- ratio of a stock is the current share price divided by the earnings per share for the past year. The Dow Jones Industrial Average, or DJIA, tracks the share prices of 30 major U.S. companies. The Dow Jones company also calculates the earnings ...

    Stock Market Basics Tutorial

    The stock market is not mysterious in its fundamental workings. A small amount of time spent learning the basics can get you started on a lifetime of prosperous investing. Even seasoned investors periodically remind themselves of the way stocks function, because sophisticated ...

    Does EPS Increase After a Reverse Stock Split?

    In a conventional stock split, the number of outstanding shares will increase. However, in a reverse stock split the number of shares declines. All per-share profitability measures, such as earnings per share or EPS, also change after stock splits. Understanding how stock splits ...

    How to Find Volume on Stock Options

    The options market allows you to speculate on the direction of stock prices -- without buying any stock. An options contract represents an agreement to buy or sell 100 shares of a stock at a specific price, within a limited period of time. Some research into basic measurements ...

    List of Stock Market Indexes

    When a company is publicly traded, it sells its stock on a stock exchange -- a place where the financial information of numerous companies is listed and investors can buy and sell shares of those companies. America has four major stock indexes that all handle different parts of ...

    Stocks During Stagflation

    Stagflation is defined by low or stagnant economic growth combined with inflation, a combination that presents unique investing challenges. Companies that rely on growth for their profits are hurt by a shrinking customer base and higher production and asset-acquisition costs. ...

    What Do the Numbers on the Stock Exchange Mean?

    The proliferation of financial information available to the general public has been both a blessing and a curse. While having more information is important when deciding on an investment, the shorthand used in the financial services industry can seem to be a confusing type of ...

    Why Does the Stock Market Go Lower in October?

    Investors' expectations have the ability to determine stock market performance, and unfortunately, this can work against equity prices. Since the early 20th century, the month of October has been associated not only with a lower stock market, but also prolonged bear markets, in ...

    How to Calculate Beta From Volatility & Correlation

    The beta of a particular stock can be found from the volatility of the broad stock market's returns, such as the S&P 500 index, the volatility of the particular stock’s returns and information on the correlation between the particular stock's returns and the ...

    Alternatives to Gold Mutual Funds

    Many people like to add gold to their financial portfolios to act as a hedge against inflation. Investors can trade fractional shares of gold bars, venture into the gold commodity futures market or invest in exchange-traded funds that are backed by gold as alternatives to gold ...

    When Am I Required to Start Taking Distributions From My IRA?

    The rules concerning individual retirement accounts do not allow you to let the money grow tax-deferred forever. When you reach age 70 1/2, the clock begins for you to start taking annual required minimum distributions, commonly called RMDs. The timing for the first RMD gives ...

    Are Retained Earnings Part of a Stockholder's Equity?

    Buying shares of stock in publicly traded companies is a primary way to invest. Stock gives the investor "equity," or fractional ownership, in the company. Key considerations for potential investors are the value of the company and its ability to generate profits. ...

    Theory of Supply & Demand for the Bonds Industry

    The theory of supply and demand holds that variations in supply and demand determine the price of anything that's for sale. This theory applies to bonds just like any other product, but it's not simple to determine the supply of bonds available on the market, and demand can ...

    How to Figure the Percentage of Investment in a Portfolio

    When measuring the percentage of investment in a portfolio, you can calculate the percentage of a type of investment, such as the percentage of your portfolio that is invested in stocks, or the amount you have invested in a specific sector, such as technology. Knowing how your ...

    The Implications of Low Dividend Yield for Investors

    When a stock pays a dividend, investors calculate that dividend as a percentage of the stock's share price. This is the dividend yield. For example, a stock that pays an annual dividend of 25 cents and has a share price of $25 has a 1-percent dividend. While it seems intuitive ...

    How Do I Buy a Single Stock?

    You can buy one stock to get used to the stock market. In fact, "Forbes" magazine suggests that having most of your money in a single stock is a good way to get ahead if the stock does well. If you move deliberately to set up the access you need to the market, you'll ...

    Gold Stocks That Pay a Dividend

    Gold stocks are one way investors can take advantage of future increases in gold prices. Buying the physical metal may be a popular way to store wealth, but this strategy does not generate income. You have to sell the gold to realize any profit. You can, however, create steady ...

    Why Do Stock Market Returns Look Like a Bell Shaped Curve?

    Distributions of stock market returns are often presented as bell shaped curves. This representation implies that stock returns are normally distributed, which can depend on the period analyzed and the frequency of sampling prices to calculate returns. For example, a return ...

    Stock Exchange Day Trading Rules

    Day trading involves rapid buying and selling of stocks during the hours the stock market is open. The true day trader has his entire trading account back in cash by the time the market closes. The Securities and Exchange Commission has a special set of rules for the brokerage ...

    Total Stock Market ETF Advantages

    A basic investment strategy is to put together an asset allocation plan -- dividing your investment money between different types of investment such as stocks, bonds, real estate and precious metals. A total stock market exchange traded fund allows you to cover one asset class ...

    What Is the Virginia529 Plan?

    The price of college eduction increased by 234 percent, relative to inflation, between 1981 and 2011, according to the National Center of Education Statistics. Because of this, parents increasingly take a long-term approach to paying for education. Virginia’s 529 College ...

    How to Complete a Stock Certificate

    Stock certificates are not as common as they once were. However, if you have one that you want to transfer to a brokerage, you have to fill out the back of the certificate. The back has blank lines or spaces that clearly indicate the type of data to be filled in. How much ...

    What Is Thematic Investing?

    Thematic investing is a way to make investment decisions based on predictions about trends, rather than on past performance of the market or the fundamentals of a specific company. Any criterion or trend can be used to inform thematic investment. Examples include fashion, the ...

    The Effects of Recession on the Stock Market

    With the intense focus on the stock market, it can be easy to forget that the market is one component of the economy; it's not the economy itself. It represents numerous economic players and entities, such as companies and pools of capital. A recession affects the companies ...

    How to Lock in Stock Profits

    When you buy a stock, three things can happen. The stock's market price can stay the same, it can decrease, or it can increase. If the stock price increases you get a nice profit. But even if your stock price goes up, chances are that at some point it will drop back down, ...

    Weaknesses & Strengths of a Savings Account

    Savings accounts are one of the most basic and routine services offered by most banks. Banks often encourage patrons to combine checking and savings accounts into a package that includes automatic deposits each month from checking to savings. Savings accounts generally are a ...

    What Preferred Dividend Value Do You Use for Calculating EPS?

    EPS, or earnings per share, is one of the most important ratios in finance. The EPS figure indicates how efficiently the company's management is using its stockholders' money. If a firm has both common stock and preferred stock, you must calculate the preferred dividends before ...

    Description of the Basic Features of Mortgage Bonds

    The term "mortgage bond" covers a range of debt securities backed by real estate. The most widely available mortgage bonds are mortgage-backed securities, or MBS. These bonds are a way to invest in the mortgage market to earn rates based on home loan rates. The ...

    Can a Mutual Fund Double Every 10 Years?

    A review of long-term stock market results shows that on a historical basis, it has definitely been possible for a mutual fund to double in value every 10 years. If the market can repeat its historical averages, some mutual funds will produce those types of returns in the ...

    How to Choose an Investment Advisor

    With hundreds, perhaps even thousands, of investment advisors working in your area, choosing one might seem awfully daunting. If you have little or no investment knowledge and if no one can refer you to someone they trust, you will have to start your search from scratch. Some ...

    How to Add a Stock Ticker to MySpace

    Stock tickers widgets for MySpace display real-time stock quotes within your MySpace page. Stock ticker widgets are free and readily available through widget sites, such as SaneBull and Widget Box. Widget Box offers several stock tickers for MySpace. Additionally, Widget Box ...

    What Time of the Day Does the Stock Market Stop Trading for the Day?

    Regular trading on the New York Stock Exchange and the Nasdaq electronic market ends at 4 p.m. EST. That's when the markets post "closing" prices, with the last trade of the day, for newspaper and other market tables and for mutual funds to calculate net asset values. ...

    How to Calculate Expense Ratio From Financial Statements

    Financial ratios can help you compare one company's financial results to another or track the performance of a single company over time. Profitability and expense ratios measure customer demand, company pricing power and cost management efforts. Being able to calculate specific ...

    Factors Influencing the Level of Investment

    There are no hard and fast rules that determine patterns and levels of investment made by either institutional investors or individuals. However, there are a few common factors and boundaries that will at least influence investors’ decisions on how much to invest. ...

    Selection Criteria for Stocks

    Most investors have their own philosophies that drive their decisions about where to put their money. Years of research, analysis and philosophizing have not provided a way to make sure-thing investments and beat the market every time. However, by setting up a system of criteria ...

    In Buying Stock, What Does the "Ask Price" Mean?

    When you look up a stock price on a financial news website, you see a single price. But when you look up the stock using your brokerage account, you discover that each stock has two prices -- a bid price and an ask price. The bid and ask prices are an important part of the ...

    How to Figure the Expected Total Return on Common Stock

    There are two basic methods for estimating the excepted total return. One involves using the dividend discount model. Mathematically, it is the sum of an infinite series of discounted growing dividends. Another relies on the capital asset pricing model. It says that the expected ...

    Introduction to Penny Stocks

    Penny stocks are low-cost investments in typically obscure ventures. Although they aren't necessarily valued at under $1, they tend to be very inexpensive per share. Many legitimate and successful companies start by issuing penny stocks, though penny stocks can also be scams. ...

    What Stocks Are on the DJIA?

    The Dow Jones Industrial Average is unique among the major stock indexes. The other major market averages track hundreds, if not thousands, of stocks and use a market cap weighting system to compute index values. The DJIA has only 30 stock components and uses a price weighted ...

    How to Invest in Bullion

    When the economy sags, many investors turn to gold as a way to keep their money safe. Gold investments traditionally increase in value in troubled economic times, or if its value doesn't increase, the losses may be less drastic. Investing in gold bullion has some unique ...

    How to Collect Autographs as an Investment

    The word "investment" brings to mind stock charts and prospectuses, but the process of generating a return for your money doesn't have to be that emotionless. If you buy something that interests you – such as an autograph – and it then appreciates in value, ...

    What Keeps a Company From Going Bankrupt on the Stock Market When Everyone Is Selling Shares?

    An important concept to understand in the stock market is that the value of the stock does not affect the financial results of the company behind the stock. The opposite is true as far as stock price reflecting the operations of the company. Also, every time shares are sold, ...

    Guide to Stocks & Bonds

    Stocks and bonds are two of the primary ways that investors can earn money through speculation. Although these two classes of investment represent enormous diversity, they share some major features. Investors should seek to gather as much information as possible -- not only ...

    The Best Way to Evaluate Mutual Fund Choices

    Considering the size of the mutual fund industry, the idea of evaluating all of its choices might seem overwhelming. The worldwide mutual fund industry oversaw approximately $23 trillion in assets in 2011, nearly half of it in U.S. mutual funds, according to a 2012 Investment ...

    How to Find Trending Stocks

    A stock or security rarely moves in a linear direction; instead it fluctuates up and down. An investor can mine stock market data and identify a movement or trend in an industry or a stock by studying its performance over a period of time. Many financial analysts produce lists ...

    Are Treasury Stocks the Same As Preferred Stocks?

    Companies become public corporations by issuing common stock in an initial public offering. Corporations have only one kind of common stock, but they can issue multiple series of preferred stocks. Though both types of stock are classified as stockholder's equity, preferred and ...

    How Much Interest Does an Investor Get on Stocks?

    Investors do not earn interest from stocks, but stocks can pay regular dividends, which can provide an income stream to an investor. The dividend rates and yields from stocks vary widely, which means investors have important choices to consider. An investor looking for dividend ...

    What Makes a Good Stock Portfolio?

    A good stock portfolio in general is broadly diversified and able to withstand market losses. However, depending on objectives and time horizon, what constitutes a good stock portfolio for one investor might not be so good for another investor. Although general rules of thumb do ...

    What Are ADR Stocks?

    American depository receipts, or ADRs, are a way for foreign companies to make stock shares available to U.S. investors. In your brokerage account, ADR shares look like any other stock. However, your ADR investments give you exposure to companies and economies around the world.

    How to Figure Gains on Multiple Stock Buys

    When you sell a stock for a profit, you need to calculate the total capital gain for your taxes. This is pretty straightforward when you bought all your shares on the same day: Just find the difference between the buying price and selling price. However, this calculation is a ...

    How to Rate Penny Stock Sites

    Stocks with a trading price at or below $5 a share are called penny stocks. Penny stock issues are usually offered by fledgling companies that need to raise cash to grow their business operations. Many penny stock sites promote these up-and-coming penny stocks as the next Apple ...

    How Do Puts & Calls Work in the Stock Market?

    The options market allows traders to speculate on the direction of stock prices or to hedge investments they already own. Before having a go at the volatile options market, educate yourself on how it works and about the two basic flavors of option contracts: puts and calls.

    Growth & Income Fund Strategies

    Growth and income funds normally represent a variety of investments made through an institutional investor such as a mutual fund. The goal of these funds is twofold: to provide regular short-term income to investors and to build a stable growth investment that is worthwhile over ...

    Stock Market Index Classification

    Investors use stock market indices for many reasons. A stock market index is simply an average value assigned to a list of stocks. The average value may be weighted or otherwise modified, and the number of stocks in the list can vary from a couple of dozen to thousands. The ...

    How to Buy Common Stock

    Common stock is the stock that is most commonly traded. It can be contrasted with preferred stock or restricted stock, which, depending on the company, may be available only to a select category or number of investors. You can buy common stock of large, established companies or ...

    How to Buy Stock on the Internet

    Buying stocks once was a relatively cumbersome business. First, you'd have to find a broker, perhaps interview several, then choose the one you liked best. You'd pay commission on each transaction, as well as a range of other fees you'd rather not think about. You'd rely heavily ...

    Bond Versus Stock

    Most investors are familiar with the old wisdom about the importance of diversifying their portfolio. Unfortunately, that wisdom doesn’t provide the all-important specifics about how to diversify. While each investor’s goals are different, developing a balance ...

    About Treasury Bond Funds

    The U.S. Treasury annually auctions bills, notes and bonds worth many billions of dollars. A T-Bill matures in a year or less, T-Notes have maturities of up to 10 years, and T-Bonds have maturity dates up to 30 years in the future. The Treasury also auctions zero-coupon bonds, ...

    The Correlation of REITs to the Stock Market

    To the extent that Real Estate Investment Trusts (REITs) trade on major exchanges in the public markets, they are correlated to the stock market. They are subject to the same conditions that can cause stock prices to gain and lose value. Nonetheless, REITs do possess some ...

    How Do Municipal Revenue Bonds Work?

    Municipal revenue bonds, like bonds in general, represent debt. Governments such as towns, cities and states issue municipal bonds to raise money for projects to benefit the public within their boundaries. Examples are new schools, highway and road repair, and libraries. ...

    How do I Buy One Stock for a Gift?

    The gift of a single share of stock is a way to encourage an interest in investing or to buttress existing interest in an industry or company. It can also be viewed as a novelty of sorts. Even a single share gives the recipient a stake in the prospects of the firm and an ...

    How to Reinvest an Interest Certificate of Deposit

    A certificate of deposit, or CD, is a term deposit account that typically offers a relatively low interest rate. CDs are offered by banks, brokerages, savings and loans and credit unions. Terms generally range from one week to 20 years. At the end of a CD term, you can choose to ...

    How to Determine Worth of Old Stock Certificates

    Old stock certificates shouldn't be simply thrown away. They can still have value if they represent an existing or merged company, or if they are valued as collectibles. A little bit of research can help you determine the worth, if any, of your old paper stock certificate.

    How Do Stock Market Returns Work?

    When you put your money in a stock, you expect to get back more than you put in. This is called a positive return. If you get back less than you put in, you have a negative return. You can calculate the return for individual stocks and you can also figure the total return for ...

    How to Monitor the Japanese Stock Market

    With the stagnant Japanese economy leaving the Tokyo Stock Exchange flat or down for many years, many Japan-watchers believe a revival may be in the works in 2013. Whether you are interested in individual stocks or mutual funds, diversifying your investments is always a good ...

    Irish Stock Exchange Listing Rules

    The Irish Stock Exchange, or ISE, is Ireland’s primary stock exchange. Companies can establish their presence overseas by having their stock shares listed on the ISE. After completing the listing requirements and paying the mandatory fee, a company can sell its securities ...

    Why Are Stock Market Futures Levels Different Than the Previous Close?

    Stock market investors are familiar with the opening and closing bells, which ring at 9:30 a.m. and 4 p.m., respectively, every weekday on the New York Stock Exchange. Even though stock exchanges are open for these traditional business hours, futures exchanges like the Chicago ...

    Inverse ETF Strategies

    A rising stock market tends to make investors nervously watch for the first sign of a steep sell-off. Other investors prefer to profit from a falling market. Both groups can benefit from inverse exchange-traded funds, or ETFs, which move in the opposite direction from their ...

    Factors That Influence the Forex Exchange

    If you're considering a look at foreign exchange trading, you should keep abreast of economic news and information. Forex traders watch a constantly flowing stream of financial numbers and reports, some of which can have a powerful influence on the value of a nation's currency.

    Two Components of Stock Value

    When you buy the stock of a company you are actually buying a fractional ownership in the company. Compare buying stock to buying a car: When you buy a new car, you want to know about its mechanical reliability, how it performs at various speeds, and its gas mileage. When buying ...

    What Was the First Company Offered on the New York Stock Exchange?

    The New York Stock Exchange has become such a prominent part of modern life, it's hard to imagine a time when it didn't exist. However, it was created in lower Manhattan in the late 1700s. Before the first stock could be traded, investors had to agree on legalities and ...

    What Happens to Dividends in a Stock Portfolio?

    Dividend investing is a common strategy because it produces a relatively reliable stream of income for investors without some of the volatility that stocks generally deliver. Indeed, while investors were withdrawing money out of the stock market in 2012 amid high volatility, ...

    How to Invest in Peer-to-Peer Lending

    Peer-to-peer lending is a more personal type of investment that allows smaller, private investors to give loans directly to consumers. The borrower has a lower interest rate, and the lender has a chance at getting a higher return. However, the loans are not secured by any ...

    Can I Invest 100 Dollars in the Stock Market?

    People on fixed incomes often don't have a lot of money to invest. However, the $100 investor does have several efficient options to get started in the stock market. The biggest obstacles are fees and account minimums. Luckily, brokerages and fund companies compete with each ...

    How to Search for the Value of Old Oil Company Stock Shares

    Old oil company stocks might be more than historical documents. They might still be valuable if they were issued by one of the seven major oil companies, known as the Seven Sisters, that once dominated the oil market. If the stock certificate was registered, the company will ...

    How Investors Invest in the Caribbean

    As a group of growing and developing economies in an appealing tropical zone, the Caribbean islands offer diverse opportunities for investors, ranging from traditional forms of investment in tourism and real estate to the various emerging markets in the islands. The Caribbean ...

    Difference Between 18k Gold Price & 24k Gold Price

    Amassing gold is a time-tested method of building wealth. Furthermore, many investors and economists consider the price of gold an indicator of the country's economic strength. Gold jewelry, coins and bullion provide an effective way to invest in the precious metal, especially ...

    How to Read a Forex Chart

    The speculative buying and selling of currencies is known as the foreign exchange or Forex market. If you're considering a plunge into this market, first learn how to read a Forex chart, a graph showing the price activity of a specific currency pair. Forex charts can be scaled ...

    Long-Term Performance of Stocks

    The stock market features a collection of publicly traded companies. Investors can buy part ownership in these companies through the purchase of shares. Over time, the stock market can make money for investors through capital appreciation, or the growth in value of each ...

    What Does the Bull and the Bear Mean in the Stock Market?

    Wall Street has its own mythology. You often hear a commentator say that the bears are in charge or that the bulls have taken over. Analysts like to say they are "bullish" or "bearish" on the market or on a particular stock. This has become so common that few ...

    What Does PPS Mean in the Stock Price?

    When it comes to investing in publicly traded companies there are myriad considerations, but none more important than the price of the stock. The price per share, or PPS, is the unit cost paid or received for each share of stock bought or sold. Just as with any type of economic ...

    Do Long-Term Bond Funds Have Reinvestment Risk?

    A long-term bond is usually classified as one with a maturity date greater than ten years from the issue date. Debt instruments in the one-to-ten year range are called notes. Long-term bonds are attractive to investors because they usually pay a higher rate of interest than ...

    Can Hurricanes Affect the Stock Market?

    Hurricanes, like other natural disasters, can have an effect on the stock market and its performance. However, it is not always clear how much of an effect a natural disaster has at any one time and to what extent the stock market reacts. There are a number of possible factors ...

    How to Find the Profit Margin From a Return on Equity (ROE)

    An ROE (return on equity) is a useful tool for deciphering the health of a company. Put simply, it is the ratio of a company's profits after expenses are taken out to the shareholder's equity (total assets minus liabilities). If a company's ROE decreases from one year to the ...

    How to Sell Stock Long

    In stock market lingo, when you own a stock you are said to have a "long position." Three things can happen to the market price of your stock: it can go up, it can go down, or it can stay the same. If you wish to lock in a profit, cut your losses or move on to a ...

    Qualitative Research Used for Stock Analysis

    While quantitative research aims to draw conclusions about the stock market based on numerical data and the technical analysis of statistics, qualitative research takes a more subjective and personal approach. Through qualitative research, investors or analysts look at stocks or ...

    Tips for Predicting Stock Market Returns

    All investors attempt to predict stock market returns when they make an investment; it’s an inherent piece of the investment puzzle because accurate predictions of returns allow you to make the best choices in your investments. Although there is no way to predict returns ...

    What Are Mortgage Buyback Requests?

    Mortgage lenders commonly sell their loans -- meaning, they sell the right to collect the payments borrowers make on their mortgages. Investors who buy those mortgages expect that the lender took the necessary steps to ensure that the borrower could afford the loan and would be ...

    Do Penny Stocks Move to the Bigger Exchanges?

    Many company stocks enter the financial markets through the penny stock exchanges. There are very few requirements to have your stock listed on the pink sheets or on the Over the Counter Bulletin Board. Companies that want to see their stocks listed on the NASDAQ or New York ...

    Why Is Open Stock Price Different Than Closed Stock Price?

    The closing price of a stock one day and its opening price the next day are often different. That's because the stock market doesn't work like a supermarket. There's no label on the shelf telling you how much a share of stock will cost. Prices are constantly in motion -- even ...

    Five Ways to Diversify Your Stocks

    Diversifying your investments reduces risk. If you invest all your money in one stock and that company has an unexpected problem, you might lose a lot of money. If you buy stocks in many companies, it is unlikely that they will all have problems at the same time, and your ...

    How to Invest in Gold and Other Precious Metals

    Precious metals are seen as one of the most durable investments because their rarity keeps the supply very fixed. Also, certain metals have been valuable for ages. Gold has been a valuable metal since antiquity, and for people who want at least to conserve their wealth, it seems ...

    How to Write Covered Call Purchases

    Writing covered calls is a popular, low-risk way to earn income from the stocks you own. Call writers are actually selling the option and keeping the amount they receive for the sale. The stock is used as collateral, so there’s no need to open a margin account. As long as ...

    How to Place a Stock Sell Order

    You can place an order to sell stock through a traditional brokerage firm or with an online trading account. Online accounts will cost less in commissions, but you may not have access to the same level of advice. After placing your sell order, you must wait for a buyer to accept ...

    Reverse Stock Split Options

    A reverse stock split is an action taken by a corporation to boost the price of its stock. For example, in a one-for-two reverse split, 200 shares of a $4 stock are replaced by 100 shares trading for $8 each. Investors end up with fewer shares that sport higher prices. Reverse ...

    What Do I Invest in After an IRA & a 401K?

    When you maximize the tax-deferral opportunities in your investment programs, you generally put more money at work for you and can accumulate money for savings and retirement more efficiently. After annual IRA and 401(k) contribution limits are reached, some additional ...

    Does It Make a Difference if You Buy Stock in a Primary or Secondary Market?

    The primary market is used by corporations to issue stocks directly to the public. Proceeds from a primary market offering go to the issuer after expenses have been paid out to the various professionals who help execute the offering. The secondary market provides for trading of ...

    When Is the Earning Season for Stocks?

    The financial news networks love earnings season in the stock market, when news on individual stocks is plentiful and stock prices can be volatile. As an investor, earnings seasons are the few times each year you can get information directly from the companies in which you own ...

    What to Buy to Mitigate Bond Fund Losses

    Bond funds offer an instant diversified portfolio of bonds, which reduces the risk that the default of any one bond will seriously hurt your earnings. However, bond funds introduce certain risks that are avoidable with individual bonds. When interest rates rise, both bonds and ...

    What Is the Rate of Return on an Index Fund?

    When you invest in mutual funds or exchange-traded funds -- ETFs -- there is no way to predict the future return that a fund will pay. But you do know exactly how an index fund will choose the stocks or bonds it invests in. You pick an index fund based on which market index ...

    What Determines Retained Earnings?

    "Retained earnings" is an accounting term that is of abiding interest to stock investors because it identifies accumulated net income of a company that is not distributed to that company's stockholders as dividends. The corporation retains these net earnings, with the ...

    Portfolio Diversification Theory

    Most of us desire investments that provide high returns at little risk. Unfortunately, in the real world, risks abound. Decades of study show that diversification is a powerful way to reduce the risk that any one badly performing asset or asset class would ruin your overall ...

    How to Recover Stolen or Lost Stocks

    Financial institutions that deal with stocks have procedures to help replace certificates that are stolen or lost. You should take action immediately upon discovering that your certificates are missing to prevent them from being fraudulently sold.

    Pros & Cons of Closed-End Funds

    Closed-end funds are mutual funds that trade more like stocks. Rather than operate like a traditional fund, these closed-end companies sell a set number of shares, which are then traded on a secondary exchange such as the New York Stock Exchange. That means these shares' price ...

    What Are the Effects on EPS of Convertible Preferred Stock & Bonds?

    Earnings per share, or EPS, is a key measure in finance. EPS is calculated by dividing the corporation's net income by the number of outstanding common shares. Convertible preferred stocks and bonds can boost a company's share count. An increase in share count can significantly ...

    Fed Rates Vs. Bond Rates

    The Federal Reserve Board can change interest rates it charges for loans to banks. This is the discount rate. Banks pay this rate to the Federal Reserve when they borrow money for the short term. In addition, the Fed sets a target date for money that banks lend to one another; ...

    What Causes Increases & Decreases in Bond Funds?

    It is an unpleasant moment when a bond fund investor who picked a fund for its yield suddenly realizes his investment has declined significantly in value. On the flip side is the positive result of investing in a bond fund that has increased in value while paying a nice yield ...

    Bond Funds That Do Well in a Downturn Market

    Bond funds can lose value when interest rates rise. Bond prices are inversely related to interest rates, because existing bonds usually offer fixed interest payments that cannot respond to higher prevailing rates. These bonds lose value in a market downturn as bond buyers demand ...

    Kinds of Investments

    You invest when you use your money to potentially make more money. Investing typically involves an element of risk: You could lose some or all of your money. The two basic types of investments are equities, which are things you own, and debt instruments, which represent loans. ...

    What Stocks Are in the Amex Composite Index?

    Investors and brokers use indexes to identify the value of a stock or market. The Amex Composite Index follows the specialty market of small and micro growth companies. Knowing the underpinnings of the Amex Composite Index can help an investor understand it and what types of ...

    Do Futures Predict Stock Prices?

    Stock futures aren't a prediction as much as a bet. A stock futures contract is a commitment to buy or sell stock at a certain price at some future time, regardless of what it's actually worth at that moment. The prices offered for futures contracts are based on where investors ...

    Returns Needed to Recover a Stock Market Loss

    When you look at the returns required to get back to even after a stock market loss, the math of percentages highlights the damage a loss can do to your portfolio. The returns needed to recover from a loss get more disheartening with the fact that the market tends to drop ...

    Stop-Limits in Selling Stock

    Stock prices move quickly throughout the trading day. From moment to moment, a share price could move by several percentage points. When you sell your stock, you want to get the best price possible. If you offer it for sale and prices drop suddenly, you could get less money than ...

    How to Develop Forex Trading Skills

    Foreign exchange is the most liquid financial market because it involves trading currencies on a global level. It includes individuals, banks, corporations and governments, and is not solely for investment. News at the national level directly impacts the currencies, and it takes ...

    How to Convert Paper Treasury Bonds

    Treasury bonds are interest-bearing bonds issued by the U.S. government. The bonds pay interest every six months until they mature in 30 years. At maturity, you receive the face value of the bond. You can sell the bonds before their maturity date or hold them until they fully ...

    Types of Mortgage Bonds

    It’s a good bet that the mortgage you negotiated with your neighborhood bank has been sold off and converted into a mortgage bond. The process is called securitization and is the fate of most residential mortgages. Governmental or private agencies buy up mortgages from ...

    What Is Portfolio Insurance?

    Portfolio insurance isn't a policy, it's an investment strategy. When you use portfolio insurance, you bet on the stock market going up, while hedging against the risk that your investments will tank instead. In theory, by balancing stocks and options on stocks, you can achieve ...

    Why Doesn't Interest Rate Parity Work?

    Perhaps you are contemplating the purchase of a Treasury bond that pays 4 percent interest for 10 years, when you become aware that a comparable government bond from Australia pays 8 percent. Economists will tell you not to blindly grab the higher rate, because the additional ...

    Evaluation Tools for Mutual Funds

    Mutual funds are offered by large institutional investors that pool the money of individuals to invest in stocks, funds, bonds and financial activities. They have a wide variety of characteristics and success rates. You should use a range of research and evaluation tools to ...

    How Do I Buy Stock Online: Is the Price Set?

    Traders and computerized programs bid on stocks every second of the trading day. There is no one set price for a stock. Prices change constantly. You might think it's impossible to name a price in advance when you want to buy a stock. But actually you can use some techniques to ...

    Online Investing Vs. Personal Broker

    Online investing offers amateur investors the opportunity to take full control of their own portfolios, eliminating the traditional role of the stock broker. There are significant advantages and disadvantages to each approach that should be considered by investors when deciding ...

    Why Tech Stocks Underperform

    Although tech stocks have become increasingly important and influential over the past few decades, many ongoing issues should make investors wary of an over-abundance of enthusiasm. An awareness of the shortcomings and difficulties that can lead tech stocks to disappoint can ...

    What Kind of Savings Bond Do You Buy a Newborn?

    U.S. savings bonds, originally referred to as "baby bonds," have been around in one form or another since before World War II. They make great gifts for newborns. They can be purchased for as little as $25, they are backed by the full faith and credit of the U.S. ...

    How to Correct Mistakes on Series EE Bonds

    As of Jan. 1, 2012, the Treasury Department stopped issuing paper Series EE savings bonds. People who still own paper bonds should examine them to be sure the bonds were correctly issued. If you own a bond with incorrect information printed on it, contact the Treasury Department ...

    How to Buy Zero Coupon Bonds

    Zero coupon bonds, also known as zeros, are distinct in that they do not make annual interest payments. The bonds are sold at a deep discount, and the principal plus accrued interest is paid at the bond’s maturity date. The less you pay for a zero coupon bond, the higher ...

    How to Buy Stocks Anonymously

    Investors who want to buy stocks anonymously must look overseas to accomplish this goal. The USA Patriot Act mandates that anyone opening a financial account in the United States must provide proof of identity. Opening an account online does not exempt an investor from providing ...

    How Can I Buy Convertible Preferred Shares of Stock?

    Many investors are surprised at the different ways they can purchase stock beyond a call to a stockbroker. Income-oriented investors select convertible preferred shares not only for their high dividend yields, but also because these stocks can participate in the growth of the ...

    What Does "Redeem a Bond at a Premium" Mean?

    Bond values fluctuate over time according to a variety of factors, including changes in prevailing interest rates and developments relating to the issuing company that impact its creditworthiness. Bonds can trade at values higher or lower than their face value, and can be bought ...

    How to Pay Short Term Gains & Losses When Trading in the Stock Market

    Every time you sell shares in the stock market, you need to record the transaction for your taxes. If you own a stock for less than one year, the Internal Revenue Service considers the transaction to be short term. You make a gain every time you sell a stock for more than its ...

    Stock Market Strategies That Work

    Savvy investors are eager to find stock market trading strategies that not only sound good but actually produce positive results. The conventional wisdom of buying low and selling high, diversifying your portfolio and looking to long-term investments are normally sound, but they ...

    Theory of Stock Market Forecasting

    Forecasting the stock market is every investor’s dream. The familiar adage, “Buy low, sell high,” is simple enough, but timing the lows and the highs is a challenge. Identifying the patterns in the market is the basis for all forecasting methods. Investors ...

    Analyzing Stock Value

    The value of a stock, like beauty, is in the eye of the beholder. Some investors might place growth above all else, while others desire current income. Faith in a company's management might also sway shareholders. The confluence of diverse investor techniques yields fluctuating ...

    How Long Do You Have to Keep a Series EE Bond?

    Series EE savings bonds are issued by the U.S. Treasury and let you defer paying taxes on the interest until you redeem the bonds. You can buy up to $10,000 per year of Series EE bonds, and the interest compounds every six months. The rate is set at the time you buy it and ...

    Why Might a Stock Dividend or a Stock Split Be of Limited Value to an Investor?

    A stock split or stock dividend from one of the stocks you own will put additional shares into your brokerage account, but even with the additional shares, you may not see any change in the value of your investments. A company declares a split or stock dividend as a way to show ...

    How to Buy US Government Savings Bonds

    The Bureau of the Public Debt sells two kinds of United States savings bonds: series EE bonds and series I bonds. Series EE bonds feature a fixed interest rate that is set when you purchase the bond. A series I bond has a composite interest rate. This means one part of the ...

    What Is a Core Mutual Fund?

    Investors are often told they need to diversify their investments. This means investing in a variety of securities so that they don't put all of their money in one place. Before investors can diversify, they need a reliable investment at the center of their portfolios. While ...

    Are Penny Stocks Legitimate?

    Penny stocks refer to shares sold in small, oftentimes obscure businesses. For the most part, penny stocks trade at under $5 and represent start-up companies that are trying to get off the ground. Penny stocks come in a variety of forms. Some are real businesses that will ...

    How to Find an Initial Investment

    If you've got a savings goal you're trying to meet, you start with the ending value you hope to have, and then figure out how much you need to invest. For example, say you want a new car in three years. If you know how much you want to spend, you can figure out how much you need ...

    An Investment Portfolio Using Only Three Index Funds

    To have a successful investment portfolio, asset allocation or diversification may be more important than the selection of individual investments. If your investment choices balance risks through up and down markets, you have a higher chance of earning attractive total returns ...

    Can You Begin Withdrawals From One IRA But Not Another?

    Once you hit the no-penalty age of 59 1/2 for individual retirement accounts, you can handle your accounts as you wish concerning withdrawals -- which will be taxed. When you reach age 70 1/2, the rules change and you must withdraw at least a minimum amount from your IRAs each ...

    How to Figure the Interest on a Certificate of Deposit

    Certificates of deposit are a form of savings account you can get at banks and credit unions. They are low-risk investments because they are insured by the government for up to $250,000. Traditionally, CDs offer a fixed rate of interest that is higher than what regular savings ...

    How Trading Stock Works Step-by-Step

    In the era of online investing, you can buy or sell stocks with the click of a mouse button. But as with all technology, what seems simple on the surface is in reality quite complex. Trading stocks, even in the electronic realm, involves a number of steps and a number of ...

    What Is a Closed-End Stock Fund?

    A closed-end stock fund is a type of mutual fund that has certain similarities to its sibling, the open-end stock fund. In both cases, a fund manager uses investors' money to buy stocks. By making one purchase in either type of mutual fund, you could own shares in hundreds or ...

    Leveraged ETF Options

    An exchange-traded fund is a basket of assets, such as stocks or bonds, that are usually tied to some index. For instance, several stock ETFs replicate the return on the Standard & Poor's 500 index. A leveraged, or geared, ETF attempts to magnify returns through ...

    Comparison of Treasury Bonds & Municipal Bonds

    Treasury bonds and municipal bonds are low-risk types of securities. The federal government issues treasury bonds, while local and state governments issue municipal bonds. When you purchase a treasury or municipal bond, you are lending money to the government for a set period of ...

    How to Set Interest Rates on a Promissory Note

    Selecting an interest rate for a promissory note can be a challenge. If the rate's too low, the lender may decide the interest income the note earns isn’t worth the risk. If the rate's too high, the borrower may refuse to accept the terms. If an agreement on the interest ...

    How to Profit From Very Small Moves in Forex Trading

    Investors can profit when a Forex currency pair makes a very small move. Also known as scalping, traders must be prepared to take on a lot of risk in exchange for a small reward. Forex traders select a currency pair, then watch the charts for an opportunity to open a trade, earn ...

    The Significance of Stock Prices Falling

    You don't have to take action every time stocks drop in price. How they drop matters as much as the decline. You can identify significant price fluctuations and learn which ones you should act on. Develop a level-headed view of the ups and downs of stocks by stepping back a bit ...

    Can You Own a Stock on Margin That Pays a Dividend?

    When you buy stock on margin, you borrow money from your broker. For example, you might buy $10,000 worth of stock by paying $5,000. You owe the borrowed portion to your broker plus interest. If your stock goes up in value, you get profits on the full $10,000, instead of just on ...

    When Do Stocks Close?

    Trading hours on the principal American stock markets, the New York Stock Exchange -- now called NYSE Euronext -- and the Nasdaq electronic system, are Monday through Friday from 9 a.m. until 4 p.m. Eastern time. Both markets also have "premarket" operations and ...

    How to Buy Public Stock

    The process of buying and selling publicly traded stocks on the New York Stock Exchange and other public stock exchanges such as the Nasdaq is straightforward. Most investors buy and sell stock through stockbrokers who execute stock trades as directed by the investor and ...

    Does Selling Stocks in an IRA Count as Income?

    The Internal Revenue Service allows you to make most types of stock and other securities investments using traditional or Roth individual retirement arrangements. You can’t buy foreign stocks or borrow money to make stock investments from these accounts, however. Both ...

    Comparison of Permanent Life Vs. the Stock Market

    The stock market and permanent whole life insurance policies are two places to invest your money for growth. The cash value account of a whole life policy and a stock market account can potentially build your savings by significantly more each year than a regular bank account ...

    Types of Investment Accounts

    If you have dabbled in the world of personal investing, you know that investments range from safe, conservative investments like U.S. Treasury bonds to high risk speculative investments like startup technology stocks. Some types of investments and some investment strategies ...

    How do I Create a Free Options Trading Account?

    As options trading has grown in popularity, broker commission rates have dropped. Once considered exotic, options trading is now as common as stock trading. Major brokerage firms compete with each other to attract new clients through discount commission fees, online trading ...

    How Long Do You Hold a Mutual Fund Prospectus?

    As an investor, it's easy to get overwhelmed by the volume of paperwork you receive for your accounts. Account statements, prospectuses, annual reports and statements of additional information are just a few of the items that may appear in your mailbox or email inbox. If you're ...

    Advantages and Disadvantages of Stocks Directly From the Company Vs. a Broker

    Individuals who want to invest in the stock market have options. Those choices include opening a brokerage account or acquiring shares directly through a dividend reinvestment plan, commonly called DRIP, offered by the company. The advantages and disadvantages to each method ...

    Is Buying Gold a Good Investment?

    As investors search for ways to grow and protect wealth, stocks, bonds and mutual funds aren't always on the top of the list. Particularly in perilous economic times, tangible assets grow in favor. This is because tangible assets -- things like real estate, antiques and ...

    The Standard Deviation of a Mutual Fund

    In a perfect world, all investment prices would move steadily in an upward direction with little deviation from that nice, smooth path. In reality, investment prices fluctuate -- sometimes wildly -- with changes in the economy and business environment. While mutual funds are ...

    What Is the MACD in Stocks?

    The Moving Average Convergence Divergence indicator, more generally known by its acronym, MACD, is a readily available tool to analyze stock price movement. Based on moving averages and easily charted, the MACD, like other tools of technical analysis, is used to predict future ...

    How to Buy Stock With No Broker

    The Internet has transformed how people conduct business. You can purchase books, clothes and even automobiles online. Not surprisingly, you can purchase corporate stocks online as well. Keep in mind that brokers are investment professionals and that bypassing their services can ...

    How do I Determine Expected Dividends and Stock Based Compensation?

    Expected dividends and stock-based compensation are two important items to review before you buy stock. Expected dividends represent the amount of a company’s profits it is likely to distribute to stockholders in the future, which can significantly increase your returns ...

    The Termination of a Section 529 Plan in Pennsylvania

    A Pennsylvania 529 Guaranteed Savings Plan is a way to save money, with tax-free earnings, for a beneficiary’s higher educational expenses. With the Pennsylvania plan, either the account holder or the beneficiary -- the person whose college expenses will be paid with the ...

    Relationship Between Trade Deficit and Savings

    The trade deficit and national savings rates are inversely related. A country’s trade balance (current account balance) is the difference between the value of exports of goods and services and the value of imports of goods and services. Through national accounting ...

    Who Decides Stock Prices?

    There are two types of stock markets, often referred to as primary and secondary. When a company first issues a stock to sell to investors, this sale is in the primary market, between the issuing corporation and private as well as institutional buyers. Thereafter, the stock ...

    Why Is it More Difficult to Determine the Value of a Common Stock Than a Bond?

    Common stocks are notoriously difficult to value. Even seasoned finance experts disagree on the price at which a particular stock should trade. While it can also be difficult to value a bond, the exercise is comparatively easier. Such discrepancy is due to the different rights ...

    Define Volume in the Stock Market

    Volume in a stock market refers to the number of shares traded within a given period of time. Markets report volume by stock, so an investor can judge activity in one issue, and also by total activity in all stocks traded on that market. Volume figures are reported daily at the ...

    What Is the Meaning of Futures Contract in the Stock Exchange?

    A futures contract is a legal agreement between two parties to purchase an asset on a future date. These contracts help buyers and sellers lock in prices to eliminate the risk associated with price fluctuations. Futures contracts also allow traders to take advantage of market ...

    Fundamental Basics for Stocks

    Companies often need to raise cash for a major expansion, such as buying new equipment and opening new locations, or to do research and develop new products. To get a lot of cash, a privately held company will "go public." That means it will get listed on a stock ...

    How to Register a Stock Certificate

    A stock certificate is a physical document used to certify ownership of shares of stock. At one time, stock certificates were issued for all shares. However, electronic management is now the default registration process. The ability to register a stock certificate is still ...

    Does the Stock Market Run on the Weekend?

    In the past, stock investors were limited in how and when they could trade. Before the Internet and online trading, brokers served as middlemen in the stock market, accepting and executing trades on behalf of clients. Electronic trading and instant communication now enable ...

    How to Buy Citi Stock

    Stock in companies like Citigroup Inc. is one of the most common forms of investment property. Citigroup trades on the New York Stock Exchange -- now the NYSE Euronext -- under the symbol “C.” It operates in the financial sector -- more specifically, in the banking ...

    Minimum Amount to Invest in Stocks

    The stock market might seem to be the domain of big-money investors, but you can start trading stocks for very little money even if you're someone of modest means. Your first stock purchase could cost well under $100, and you can add to your purchase in small increments. Once ...

    Why Invest in Small-Cap US Stocks?

    The "cap" in small cap stands for capital. Small-cap companies don't have as much cash and assets as large-cap companies. This makes them riskier because they're more prone to failure than established businesses. On the other hand, young, growing companies can succeed. ...

    How to Close a FOREX Account

    As investors in the foreign market exchange know, FOREX accounts can be tricky to maintain and risky for any investor, especially beginning ones, according to the Wall Street Journal. Regardless of your reasons, closing a FOREX account should generally be a simple process. It ...

    Are OTC & Penny Stocks the Same Thing?

    Over-the-counter -- OTC -- stocks are shares that do not trade on the stock exchanges such as the New York Stock Exchange or NASDAQ. Penny stocks trade exclusively in the OTC markets. However, not all companies trading OTC are penny stocks. Some very large international ...

    Higher Rate of Return On Stocks & Bonds Based on Risk

    Investors risk their money. For example, they may invest in stocks, and those stocks could drop in value. Also, they may loan their money to a company or to the government by purchasing bonds. The issuing organization promises to pay interest, but it could default on payments. ...

    The Advantages of Equity Portfolio Investments

    An equity portfolio is a collection of investments in the stock market. Certain corporations offer publicly-traded stocks through trading facilities that are regulated by the Securities and Exchange Commission, as expressed in the Securities Act of 1933 and Exchange Act of 1934. ...

    How to Fill Out a Stock Transfer Statement

    Whether held in paper form or electronically, stock certificates are assets that can be transferred to charities, institutions or people. Stockowners legally transfer ownership by completing a stock transfer statement. Transfer agents are responsible for ensuring the stock ...

    The Kinds of Equity

    Equity refers to the ownership of some asset. The word is commonly associated with ownership of a company or ownership of real estate. In both contexts, the amount of equity you own can be quantified into a dollar figure. Homeowner’s equity is directly related to the ...

    The Effects of Dividend Policies on Stock Prices

    One of the jobs of a corporation’s board of directors is to set dividend policy, which involves the timing and amount of dividends to pay. Academics are divided on the effects of dividend policy. Some say that dividends are important in attracting investors and supporting ...

    How Dilution Affects Stock Price

    Stock represents the ownership share of a corporation. It is part of the firm’s stockholders’ equity, along with the accumulated profits, or “retained earnings," of the company. The “float” of a company is the number of outstanding shares of ...

    The Basis of Stock Prices

    There is some structure to the basis of stock prices. But "market values" -- another term for stock prices -- are mostly unpredictable. The mystery surrounding stock prices is not where a stock has already traded, but whether it has the potential to trade higher or is ...

    Bond Price Vs. Interest Rate

    When you invest in bonds, you lend money to the company or government that issued the bond. The price you pay affects the effective interest rate you get. Bond prices vary depending on market forces and investment risk. Like any other lender, you want to earn a good return while ...

    What Is the Percentage of Americans Who Invest in the Stock Market?

    The percentage of Americans who invest in the stock market tends to fluctuate with the condition of the economy. When the economy is stronger, the percentage rises. When the economy is relatively weak, the percentage falls. Even so, surveys have consistently shown that more than ...

    Dividend Stocks Vs. Stock Market

    Stock markets like the New York Stock Exchange -- or NYSE Euronext -- offer a galaxy of different stocks to suit the needs of most stock investors. Some investors seek current income through high-dividend stocks, while others favor long-term capital gains and may avoid stocks ...

    How to Invest in Mining Stocks

    Base materials always have been an attractive investment. These materials are the basic building blocks of everything. Mining stocks are a way to invest in these base materials, but as an ongoing business rather than directly in a certain commodity. Investing in mining stocks is ...

    How do I Read a Stock Chart Direction for the Hour?

    Investors use stock charts to analyze a stock’s price activity and to try to gauge future price movements. While long-term investors often review charts that span a year or more, short-term traders typically review intraday charts. An intraday chart reveals a stock’s ...

    How to Sell Stock on Ex-Dividend Day

    When a company pays a dividend, it sets a date by which shareholders must own the stock to qualify for the dividend. This is the “record date.” The stock exchange sets an ex-dividend date two days before the record date. That means anyone who buys the stock on the ...

    What Are Microcap Stocks?

    Microcap stocks are a category of stocks consisting of small companies. These stocks have a low market capitalization, particularly in comparison to the larger stocks traded in major stock markets. Market capitalization equals a stock’s share price multiplied by the total ...

    How a Stock Ticker Works

    The original stock ticker machine installed at the New York Stock Exchange in 1866 printed stock prices on a tape as trades went through. Investors could gather wherever they found a machine and get the latest prices on stocks they were interested in. The updates came in every ...

    Trading Strategies for Crude Futures

    Crude oil futures are known for their high volatility and wide price swings. It’s not unusual for crude oil futures to trade down in the morning but close at a new high when the trading day ends. Traders use several popular strategies that take advantage of crude ...

    Do You Pay a Stock Trade Fee to Buy and Sell?

    Investors buy and sell stocks through brokers licensed to do business on markets such as the New York Stock Exchange or Nasdaq trading system. Brokers charge commissions or fees for their services, but not all charge the same rate, and most brokers offer varying levels of ...

    How Do I Make a Personalized Stock Chart?

    Brokerage firms and financial news reporting agencies often provide free stock charts for public use. The problem is that the charts often used predetermined indicators that may not provide meaningful stock information to the user. You can, however, elect to edit the basic ...

    Safe Investments for the Elderly

    As investors grow older, they become more sensitive to risk. This is because they generally have smaller incomes and less time to recover from financial setbacks than when they were younger. However, if elderly investors choose to completely shield their nest egg from risk, they ...

    Negatives on Fixed-Rate Annuities Vs. Bank CDs

    People looking for guaranteed investment returns may find fixed-rate annuities and bank certificates of deposit (CDs) appealing. Fixed-rate annuities are investment contracts issued by insurance companies offering long-term guaranteed fixed rates of return. Bank CDs offer ...

    How to Borrow From Annuities

    Annuities are an investment product sold through the insurance industry, and are unlike most other investments in some crucial ways. Many financial advisers treat annuities as an unwanted stepchild, pointing to their limitations and often-high costs as reasons to avoid them. ...

    How to Calculate a Floor Value of Convertible Bonds

    A convertible bond represents a mix between a regular corporate bond and a stock option. It pays interest like a regular bond but also gives you the right to exchange it for a fixed number of shares of the company’s stock. When a company’s stock price is high, its ...

    Gold and Silver Closed-End Funds That Pay a Dividend

    Investors seeking diversification often look beyond stocks and bonds to commodities such as precious metals. There are various ways to invest in gold and silver, including open-end mutual funds, direct ownership of bullion and coins, exchange-traded funds and shares in mining ...

    How Do I Invest in Overseas Stocks?

    Investors in the U.S. are encouraged to diversify their domestic investments by investing abroad. Spreading bets internationally can lower portfolio risk and take advantage of growth in developing economies. However, investing in foreign stocks can increase fees and can expose ...

    How to Use Other People's Money to Invest

    Buying securities from your cash account is pretty straightforward. You put money into your account, purchase the securities you want and pay for them with money in your cash account. For example, if you have $5,000, you can buy 100 shares of a $50 stock. However, you might be ...

    How to Unload a Horrible Annuity

    Annuities are complex and poorly understood investment vehicles, largely because they straddle the worlds of insurance and investments. Their stability and potential for guaranteed returns are appealing to conservative investors, especially during market corrections such as the ...

    How Do I Make a Stock Market Equity Trade?

    When you start investing in the stock market, much of the material you research will mention trading equities. This simply means buying or selling shares of stock, which represent ownership -- or equity -- in a company. Before you buy your first piece of a publicly traded ...

    How to Request a Prospectus

    Smart investing requires research to find the investments most consistent with your investment goals. One essential research tool is the prospectus. Federal securities law requires that corporations making initial public offerings of securities -- and investment companies ...

    About Environmental Bond Funds

    Environmental issues like air and water pollution and greenhouse gas emissions represent a growing problem for modern society. While many people want to see these problems addressed, financing for environmental projects can be hard to come by for cash-strapped public agencies ...

    How to Figure the Return Rate on Certificates of Deposit

    When you consider different certificates of deposit for investment, it’s important to compare each one’s annual percentage yield instead of only the interest rate. While the interest rate is important in calculating your periodic interest payments, the APY factors in ...

    How to Invest in Agriculture

    Agriculture is subject to steady, though cyclical, demand. People need to eat, and the population is growing. Investing in agriculture can be simple or complicated, depending on how direct you want your exposure to be. Investing through the stock market is easy through ...

    How Do I Read a Stock Index?

    The Dow Jones industrial average, also known as the Dow; the S&P 500; and the Nasdaq composite are the three primary U.S. stock market indices. They act as stock market direction indicators and react strongly to positive and negative financial and world news. Each index ...

    Are Dividends Received on Preferred Stock Treated As Qualified Dividends?

    Preferred stock is always issued with a stated dividend, but there is no automatic designation as to whether preferred stock is qualified or non-qualified. The term “qualified” is shorthand for “qualified for a lower tax rate.” The designation depends on ...

    What Is Quant Investing?

    Investing features many ways to make and -- unfortunately -- lose money. Finding ways to maximize investment gains while minimizing downside risk is one of the ultimate goals of the investor, and there are several well-recognized approaches to this process. One is quantitative ...

    What Is the Difference Between Earnings Ratio & Dividends?

    The earnings ratio, which is also known as the price/earnings ratio, and the dividend are two factors that investors consider when analyzing stocks. Both provide clues to the strength and value of a stock as investors weigh whether to buy, sell or hold shares. Investors consider ...

    How to Buy Stock Calls

    If you believe the market price of a particular stock is going to increase, you are said to be "bullish" on that stock. To take advantage of the rise in stock price you could purchase the stock outright, or you can profit from an increase in the stock's price without ...

    Preferred Stock Options

    Options, which confer important rights to buy or sell shares, are traded on common stock, but are embedded within preferred stock. Stock option trading is based on the expectation by one side of the trade that the stock’s price will rise or fall within a few months, which ...

    Trends in Defined Contribution Retirement Plans

    Employers that offer defined contribution retirement plans are following a trend that places much of the investment risk on employees. While it remains the responsibility of an employer -- also known as a plan sponsor -- to provide workers with investment options, it is ...

    What Is a Stock Margin Account?

    Trading stocks on margin is a strategy that can increase the return on your investment because you don’t put up the full purchase price of the shares. Along with the increased profit potential, margin trading carries more risk. Before you decide to open a stock margin ...

    Fixed Income Investment Options With a Large Sum

    Fixed income investments, commonly referred to as debt instruments, are investments that pay a return, usually in the form of interest or dividends, on a fixed schedule. The amount of the return might also be fixed or it may vary. Investors might obtain higher interest rates or ...

    What Does the Average Person Have Saved for Their Retirement?

    More than half of the people surveyed by Dutch bank ING said they would boost their retirement savings if they had socked away less than the average, according to a 2012 report on the Fox Business website. The media often report people need to start saving more for retirement. ...

    How to Determine the Value for Shares of an IPO

    A stock’s market price in an initial public offering does not necessarily reflect what the shares are worth. Investors can get overly excited over a hot new company and push the share price higher than the stock’s actual book value. Stock share value is normally ...

    Fund Investing in Dividend Heavy Stocks

    Income-oriented investors tend to favor stocks that pay high dividends, even if these stocks don’t show much price movement. Dividends are distributions of profits to holders of a firm’s common or preferred shares. The annual dividend amount divided by the stock ...

    Covered Calls Vs. Bonds

    Two popular income-producing vehicles are bonds and covered calls. These two investments have different risk/reward profiles and investment horizons. Bonds tend to be long-term investments that can span decades, and covered call strategies involve holdings of 1 to 3 months and ...

    How to Download Stock Prices From Yahoo

    When you analyze a stock as a potential investment, it helps to review its price history to see where it has been trading. Yahoo Finance provides easy access to this data for any stock on its website and allows you to download it as a comma-separated value, or CSV, file. This ...

    I Bonds vs. Annuities

    Series I savings bonds and annuities are two investment choices that offer a high level of safety and tax-deferred growth of earnings. Both investment choices also allow a beneficiary to be named so the money can pass to an heir without going through probate. Look at annuities ...

    About the Dodge & Cox Balanced Fund

    Dodge & Cox Balanced Fund, also known by the symbol DODBX, is a value-oriented, no-load mutual fund that holds stocks and bonds. This fund regularly makes financial publication lists of top funds. Created in 1931, it is one of the oldest mutual funds in the U.S.

    Why Do Stock Prices Increase After a Takeover?

    Depending on the circumstances, investors who own shares of a company that gets bought out by another firm may experience a quick jump in their share prices. That is because investors, by way of a vote, have the final word on whether or not a takeover deal is ultimately ...

    Differences Between an Annual Report & a 10K

    Companies that trade in the public markets have a responsibility to investors and regulators to report accurate information about the financial and operational performance of their business. Companies are required by law to present the U.S. Securities and Exchange Commission ...

    January Stock Market Trends

    When it comes to stock market speculation and trends, no period is as widely analyzed as the first month of the year. January has both beginning-of-the-year stock bargains and a bevy of analysts studying the month for clues to the future. Some bet their money on January's ...

    Trend Vs. Volatility

    If you look at stock charts, you'll see that no stock rises in a straight line. In fact, stocks that go up tend to zig-zag in a generally upward direction with ups and downs along the way. The ups and downs are the volatility. The general direction is the trend. The same idea ...

    Is It Smart to Liquidate Your Investments?

    Sometimes you need to liquidate your investments because you need the money for something you want to purchase. At other times, you might be tempted to liquidate your investments because you fear a market drop or your stocks are not performing as you had hoped. An impulsive ...

    Are High-Priced Stocks Dangerous?

    When purchasing shares of a high-priced stock, the danger of losing money does not automatically increase. A high-priced stock is only "dangerous" in the sense that the more money you pay for a stock, the more money you risk losing. Any stock, including pricey ones, ...

    Supply & Demand in the Stock Market

    The stock market works as a double-auction market, where the basic forces of supply and demand are in full vigor. A buyer and a seller meet, usually electronically, and haggle over the price of a particular stock. If they can agree on a price, the trade is made. The core factor ...

    Components of Common Stock

    Since before the Great Depression, the average return from the stocks of major corporations has exceeded 10 percent per year. Not all stocks perform well every year, but people who invest for the long haul -- typically 15 years or more -- usually earn strong, positive returns. ...

    How to Buy Into Cheese Futures

    Cheese is delicious and nutritious. It can also be lucrative for futures investors. The Chicago Mercantile Exchange launched its cheese futures contract in 2010, allowing speculators and hedgers to bet on cheese price trends. The contract is cash settled, which means you can bet ...

    How do I Determine Whether to Buy Stock Options?

    Stock options are powerful tools that can be used to generate outsized gains or losses relative to their costs. For instance, you could buy 100 shares of XYZ Corporation at $50 each, or $5,000. If the price doubles to $100 a share, your profit is 100 percent. If instead you ...

    How do I Buy Inflation Protected U.S. Bonds?

    Investors who fear an imminent uptick in inflation seldom invest in bonds, which usually lose value as inflation drives up interest rates. However, Treasury Inflation-Protected Securities, or TIPS, are different. They benefit from inflation because the Treasury increases the ...

    Classifications of Stocks

    The key to investing successfully in the stock market is to pick stocks of companies that match your risk tolerance and provide the potential for growth you require consistently. With thousands of stocks to choose from, this is easier said than done. Investors make sense of the ...

    What Are Domestic Stock Funds?

    When you want to keep your money working in the U.S., one of your choices is a domestic stock fund. These funds focus most of their investing on American companies. Though they have that focus in common, there are many differences. Some invest only in large companies, while ...

    How Do Companies Get Listed on the New York Stock Exchange?

    The New York Stock Exchange is a worldwide market, merged with the American and foreign stock exchanges into NYSE Euronext. About 80 percent of American securities are traded through that market. To be listed, a company must meet minimum financial and nonfinancial standards, ...

    Rebalancing vs. Trend Following

    The investing world is full of tortoises and hares. Tortoises swear that slow and steady wins the race. Hares claim they can outpace the market. You can create a balanced portfolio designed to give you steady gains, or you can jump on market trends as they develop. It pays to ...

    How Do Series I Bonds Work?

    When investors talk about "inflation risk," they mean the danger that the purchasing power of the dollars they save might be eaten away over time by rising prices. Series I United States savings bonds are designed to offset inflation. When you invest in I bonds, the ...

    What Are Orphan Stocks?

    Orphan stocks are companies that have fallen off the Wall Street radar. Low share prices or other reasons result in a lack of coverage by the Wall Street analysts who typically provide buy, sell or hold type ratings on stocks. For the individual investor, orphan stocks can be ...

    What Types of Investments Are Included in a Variable Annuity?

    A variable annuity resembles a mutual fund, in that it combines a range of investments to spread the risk of any single investment declining in value. But unlike a mutual fund, a variable annuity can make regular payments. And the investor can put money in the annuity by making ...

    How to Find Stocks That Are Going to Split

    When a company splits its stock, it increases the number of shares that existing investors own, which reduces its stock price by a proportionate amount. The transaction has no effect on the value of the company or investors’ holdings. It just slices the same pie into ...

    Can Savings Bonds Be Reinvested?

    Current investors can buy electronic EE and I savings bonds online at TreasuryDirect. New EE bonds pay a fixed rate of interest, while I bonds pay a combined rate that adjusts for inflation. U.S. savings bonds earn interest until their final maturity date. After they mature, you ...

    How to Find High Volume Penny Stocks

    The U.S. Securities and Exchange Commission defines a penny stock as one that trades for under $5 and is issued by a very small company. A penny stock’s volume represents the number of shares traded in the market in a given day. While a high volume doesn’t ...

    How to Write a Promissory Note When Someone Owes You Money

    A promissory note is a written agreement that the borrower will repay a specific sum of money by a set time. Although many promissory notes are prepared by attorneys, financial institutions and lenders prepare their own. You can write your own promissory note to document ...

    How Often Should Your Mutual Funds Distribute?

    Although a mutual fund is required to pass through all earnings and net gains to investors, the timing of those distributions is left up to the individual mutual fund companies. Based on the type of fund, most funds follow a similar pattern of dividend payments. Your fund ...

    Key Components of Retained Earnings

    Three components constitute a company's retained earnings. First, all corporations over 1 year old have a retained earnings balance based on accumulated earnings since their birth. Second is the current year's net income after taxes. The third component is any dividends paid to ...

    How to Buy Stocks Monthly

    With Direct Investment Plans you can buy stocks directly from the company you are investing in without having to use a broker. DRIPs offer the advantage of letting you buy stock on a regular basis to build a position over time. Some DRIPs offer stocks that are discounted from ...

    How do I Scalp Stocks?

    Stock scalpers want to make a small profit off multiple daily trades. Scalpers open and close trades sometimes in less than one minute before returning to their charts to look for the next scalping opportunity. Although the idea of jumping in and out of the market making quick ...

    How to Move UTMA to a Minor's Savings Account

    A Uniform Transfers to Minor Act account, or UTMA, is a financial account used by an adult to transfer assets to a minor child. Money or other assets, such as stocks, bonds and mutual funds, in a UTMA account are irrevocable gifts. Although the custodian of the account can ...

    The Difference Between Municipal & Taxable Bonds

    Municipal and taxable bonds have some things in common, since they both represent a loan that an investor is making to a bond issuer. But they also are different in many ways. Municipal bonds are issued to raise money for projects that benefit the public, and investors get a tax ...

    Characteristics of Common Stocks & Bonds

    Among the many investments available for your portfolio, two of the most popular types are common stocks and bonds. Investors purchase bonds intending to earn regular income and invest in stocks that hold potential for long-term growth. In addition, some stocks pay regular ...

    How to Buy a First Stock on E-Trade

    E*Trade is an online brokerage firm that was one of the pioneers of Internet-based investing. Fundamentally, the steps to making a first trade with E*Trade are similar to those for any land-based financial institution. The main difference is that with E*Trade you'll conduct your ...

    How to Avoid Paying Annuity Surrender Charges

    Annuities are an expensive product to issue. Their management costs are similar to those of any other investment, and their underlying insurance features require a full underwriting process as well. Add in the cost of broker commissions, and it can take years for the company to ...

    Early Payoff Vs. Investing

    When you have a mortgage, you pay interest on the money you owe. If you pay off that mortgage early, you won’t owe that interest, but if your mortgage interest rate is low, you might be able to invest your excess cash, rather than pay off the mortgage with it, and make ...

    Interesting Stock Market Facts

    It is easy to get caught up in the daily stock market activity and lose sight of the interesting facts in the market's history. For instance, while the New York Stock Exchange is the largest U.S. Stock exchange, it is not the oldest. The Philadelphia Stock Exchange was created ...

    Understanding Phantom Shares

    In investor jargon, the term "phantom shares" has more than one meaning. One has to do with a promise of stock shares not yet in existence, or with the value of those shares. Another meaning refers to the stock trading practice known as "naked short selling." ...

    What Is a Mutual Fund Complex?

    Mutual funds offer a diversified investment opportunity that allows savers to own a fraction of a larger portfolio of investments. Funds are often grouped and identified as a mutual fund complex, or family of funds. A fund complex can offer more diversification and investment ...

    How Does a Stock Index Work?

    A stock index is a list of selected stocks whose prices have been combined into a single value. The most widely quoted stock indices include the Dow Jones Industrials, the S&P 500 and the Wilshire 5000. The custodians of a stock index make certain decisions that influence ...

    How do I Leave an Annuity?

    There's a well-known aphorism that says "change is the only constant." That's certainly true of investing, a field where even the best products periodically encounter hard times. It's often necessary to change your investments, either because their performance is ...

    Why Do You Need a Broker to Purchase Mutual Funds?

    Mutual fund companies, known legally as open-end companies, are investment companies that take money from a large pool of investors, mingle those funds and use them to buy a portfolio of securities. Each investor owns a tiny piece of each security in the fund. Different mutual ...

    How to Chart Commodity Market Price Behavior

    Charting prices on a daily basis is one way you can learn about how a commodity behaves in the marketplace. Most commodities are cyclical and you can look at a chart to find repetitive price patterns, get a sense of changes in a commodity’s supply and demand and determine ...

    Trader Vs. Investment Banker

    Traders and investment bankers are both associated with financial services but each profession has a distinct role. Investment bankers are involved in the equity and debt capital markets, and help corporate executives value assets, raise money or turn a struggling business ...

    What Is a Non-margin Stock on a Cash Account?

    To buy stock on margin means you used a loan -- a margin loan -- from your broker to pay for part of the cost of the stock. A non-margin stock means you paid for the full price of the stock with cash in your brokerage account. An understanding of margin loans will allow you to ...

    What Is the Effect of Economic Deflation on Stocks & Bonds?

    Deflation is a fairly rare economic phenomenon in which the price of goods and services decreases over time. It is often associated with a contracting or stagnating economy in which investment is curtailed and economic expansion becomes very difficult. Deflationary trends can ...

    What Are Hedge Funds Holding?

    What a hedge fund is holding represents the financial securities that the fund owns. The types of securities that a hedge fund holds varies based on the investment strategy assigned to a particular fund. While hedge funds generally adhere to a particular investment strategy, ...

    A List of Leading Indicators for Stocks

    Traders use leading stock indicators to predict future price moves. Ideally, leading stock indicators send you a signal to enter a trade before a new stock trend develops or an existing trend reverses so you can ride the momentum for maximum profit. But in the real world, ...

    What Are T Shares of Mutual Funds?

    In many mutual fund families, seven or more types of share classes may be offered for a single fund. Unlike stock classes, which identify per share voting rights, fund share classes identify the fee structure the investor must pay to participate in the fund. T shares are a type ...

    When Do Stocks Become Mature?

    There is no one right of passage that makes a stock mature. Instead, the development of a stock depends on features such as consistency, history and leadership. A company's ability to demonstrate these characteristics will determine whether or not a stock is mature. Once a stock ...

    COMEX Gold Contract Specifications

    From the days of antiquity, man has valued the unique beauty and rarity of gold. It is used as a form of money but also is important in industry, jewelry, electronics and dentistry. You can own or control gold in various forms: coins, bars, gold mining stocks and futures. COMEX ...

    How do I Buy Pfizer Stock?

    Founded in 1849, Pfizer Inc. is one of America’s oldest corporations. The company produces a broad array of drugs, vitamins and vaccines. Pfizer played a leading role in introducing large-sale manufacture of products like penicillin and vitamin C. Following World War II, ...

    Indian Stocks That Trade in the United States

    The size of the U.S. stock market provides the additional advantage to investors that foreign companies also want to list shares on the U.S. exchanges. Foreign company stocks list as American Depository Receipts, or ADRs. An ADR share functions just like the shares of a domestic ...

    How to Use ADX for a Technical Analysis

    The Average Directional Index, or ADX, is a technical indicator designed to measure a trend. It is used to see if there is any movement in the market or in a security, and to measure the strength of any prevailing trend. It is a lagging indicator, meaning that it confirms an ...

    How to Plan Trading Objectives in Futures Trading

    Developing a trading plan does not guarantee a successful trade, but it can shift the odds in your favor. A trading plan lets you consider how you want to handle the risks inherent with futures trading and determine an exit strategy should the market move against you. Taking the ...

    The Dogs of the Dow

    Dogs of the Dow is an investment approach meant to produce higher returns than those earned by the Dow Jones Industrial Average market index. The concept involves identifying the 10 stocks with the highest dividend yield in the Dow. A high dividend yield suggests a stock's price ...

    Typical Stockbroker Fees

    One of the first decisions an investor has to make at the onset of investing is whether to use a discount or full-service stockbroker. Discount brokers offer fewer services than full-service brokers and their fees are generally lowest. While discount brokers charge investors for ...

    Long Call Option Strategies

    Call options provide an opportunity to make big profits if stocks go up with relatively little money at risk -- especially compared to the cost of buying shares of stock. Long call option strategies profit from higher stock prices, so the primary goal when using these strategies ...

    How to Invest Money for College

    Investing strategies for college costs depend on a few considerations. First, the age of the beneficiary of the investments is important. Second, the tuition for your preferred college influences your strategy, as costs can vary widely. Finally, your income level now and in the ...

    Government Regulations on the Stock Market

    Although free trade is essential to the stock market, completely unfettered capitalism can have disastrous effects. To protect investors’ money, equalize the playing field for all investors and prevent market fluctuations that can drive an economy into the ground, the U.S. ...

    Evidence of the Bandwagon Effect in the Stock Market

    Stocks go up in value when they have more buyers than sellers. The increased demand allows sellers to wait for a better price while buyers compete. When stocks have more sellers than buyers, they go down. These moves gain so much momentum that prices rise or drop sharply in a ...

    The Advantages of Government Bonds

    When governments need to raise money for projects, they can't always increase taxes. Instead, they often issue bonds that you can buy. You then receive principal and interest payments for a certain number of years before the bond matures. Depending on your investment goals, ...

    Explanation of the Dow Jones

    The Dow Jones Industrial Average -- often referred to as the Dow Jones or just "the Dow" -- is a stock market index. A stock index tracks the price changes of a selected group of stocks. With 120 years of history, the Dow is the oldest U.S. stock index and the most ...

    How to Buy Gold Coins as an Investment

    Although often hoarded during times of war and economic collapse, investors with less dire fears still include gold in a diversified portfolio of investments. Gold prices are not highly correlated with financial assets like stocks and bonds. As an investor in gold coins, you ...

    How to Buy a Stock and Set It So It Automatically Sells After a Price Drop

    When you buy a stock, the goal is to have it go up in value and produce a profit for your brokerage account. However, it can be a prudent strategy to set a price to sell below the purchase price, so if the stock goes down instead of up, your losses are limited. The aptly named ...

    High-Yield Bond Risks

    When you buy a bond, you're actually loaning money to the issuer in exchange for the promise of regular interest payments and the return of your investment once the bond matures. The bonds offered by highly rated companies and municipalities are commonly referred to as ...

    How Do I Invest in Oil Commodities or Stocks?

    Investors can express their convictions about oil price movements by purchasing stock in companies that are involved in the oil "value chain," include companies that drill for oil, trusts that own the rights and collect royalties from oil-rich properties, oil refiners, ...

    How to Make Money Investing in Independent Film Makers

    Independent films typically cost far less to make than studio films, but can sometimes find a widespread audience and big profits despite their modest budgets. The difference between an independent film and a studio film is that the companies who finance an indie usually do not ...

    What Is Retained Earnings on a Balance Sheet?

    Any company that has made more profits in the past than it has distributed to stockholders will have a line on its balance sheet termed "retained earnings." While this line gives an idea about the corporation's past performance, it may or may not correlate with the ...

    The Differences Between Preferred Stock and Convertible Preferred Stock

    Large corporations tend to issue a few types of publicly-traded shares. In addition to common stock, which all public corporations have, some also issue a class of share broadly known as preferred stock. Preferred stock confers very different rights on the shareholder than ...

    5 Reasons Why Not to Fear Municipal Bonds

    Municipal bonds, often called "munis" or "muni-bonds," are issued by government agencies, including states, cities and towns, looking to raise money. Bond issuers use the proceeds earned from a bond sale for infrastructure and transportation projects, such as ...

    What Is the Dow Jones Average and How Was it First Calculated?

    The Dow, whose official title is the Dow Jones Industrial Average, is an index of large U.S. stocks. It has a price based on the 30 stocks that are considered to be leaders in their respective industries. Despite the reference to the industrial sector in its title, the Dow ...

    Commingled Fund Vs. Mutual Fund

    "Commingled fund" is a term that describes a particular type of mutual fund that is exempt from many of the requirements of other mutual funds. One way to distinguish between these fund types is to look at the regulatory framework with which each must comply. This ...

    Why Does the Value of a Share of Stock Depend on Dividends?

    Dividend payments are the primary method companies share their profits with stockholders. Numerous investors rely on dividends for their living expenses and construct a stock portfolio primarily to maximize their dividend income. Dividend payments increase demand for a stock and ...

    Inverse Relationship Between Bond Prices & Interest Rates

    How bonds get priced is a mystery to many novice investors, but just about anyone can grasp the fundamental relationship between bond prices and interest rates. It's an inverse relationship: When interest rates are rising, bond prices will fall; when interest rates are falling, ...

    Stock Splits and Price Reaction

    Stock splits are rare but significant events in the life-cycle of a publicly-traded corporation. Both the number of shares outstanding, as well as the market price of a stock can move dramatically in response to a stock split. The price of the stock can both appreciate and ...

    Definition of Debenture Bonds

    A significant risk for a bondholder is the potential for the bond issuer to default. When a bond issuer defaults, an investor's return is less than the original, promised return. The more likely it is that the bond issuer will default, the higher the risk premium, and the higher ...

    List of Sin Stocks

    For every vice there may be a virtue, but vice stocks pay their shareholders better dividends. It is no accident that vice stocks do well in all economic climates. People party, smoke and gamble in good times and bad; they just do it for different reasons. Traders can take ...

    What Is a Secondary Certificate of Deposit?

    A traditional certificate of deposit requires that you deposit money into a savings institution for a fixed period of time. In return for your money, the bank pays you a rate of interest rate until the end of the fixed period, which is called the maturity date. Investors usually ...

    The Definition of "Redeemable Bonds"

    A redeemable bond, often referred to as a “callable” bond, is one that allows the issuer to call, or buy back, the bond before its maturity date. Bond calls are mandatory and cannot be contested by the bondholder. Bonds are callable only if the original bond ...

    Floating Rate Bond Disadvantages

    Floating rate bonds are lesser known than their fixed-rate brethren. They are nicknamed “floaters,” and are usually issued by corporations. Floaters have adjustable interest rates that are periodically reset to reflect changes to prevailing rates. This feature ...

    What Is The Average Dividend Yield of the Stock Market?

    A dividend yield can tell an investor a lot about a stock. It can determine an investment's potential relative to the stock market or among a particular group of stocks trading in the same sector. Although dividend income is a staple in the U.S. stock market, no grand average ...

    Pros & Cons of an Individual Stock Account

    When you have your own trading account, you can make your own stock-buying decisions. While this can be an exhilarating experience, it also has a number of pitfalls. You may find it useful to look at some of the pitfalls you face with an individual stock account or trading ...

    The Advantages of Preferred Shares

    Preferred shares provide a number of benefits that combine the characteristics of common stock and bonds. Like their common stock relatives, preferred stock is equity that is issued by a company to raise cash. Preferred shares differ from common stock in that they always pay a ...

    Can I Contribute to More Than One 529 Plan?

    If you're looking for a way to save for future college expenses for yourself, your child or another beneficiary, a 529 plan offers some key tax advantages. All 50 states offer at least one 529 plan, and you can contribute to any of them, regardless of your actual state of ...

    How to Invest in One Stock

    Investing in a company's stock offers an investor partial ownership in the business. For instance, an investor has the right to share in the profits that the company earns and to also cast a vote on major events, such as a change in the members of the board of directors, or a ...

    Mutual Fund Buyer's Guide

    Mutual funds let investors pool money into an account that buys stocks, bonds, short-term money market instruments or other securities and assets. The fund maintains a diverse ownership of investments called a portfolio that is selected and monitored by a fund manager. ...

    Helpful Stock Buying Tactics

    If you put as much time and care into learning stock-buying techniques as you do in researching and picking stocks, you stand a better chance of succeeding as an investor. Advanced buying methods can protect you from getting a price that is too high or having your order execute ...

    The Advantages of Convertible Bonds

    Before an investor evaluates the advantages of a convertible bond, he needs to understand this investment type. When buying a bond, an investor makes a loan to an indebted financial entity, called an issuer. The bond is a written promise that the issuer will repay the loan on ...

    Buying Rental Property Vs. Investing in a REIT

    When you’re ready to get into the real estate market, your first thought might be to start looking at properties. However, you can also invest in real estate by putting money into a real estate investment trust. Each of these types of real estate investments can provide ...

    What Does Delisting on the Stock Market Mean?

    For publicly traded companies it can be a status symbol to have their equity shares listed on a major stock exchange, such as the New York Stock Exchange Euronext or Nasdaq. Listed companies have met a variety of criteria, including financial criteria, established by an ...

    Components of the Dow Jones Financial Index

    The Dow Jones Financials Index is one of 10 major indexes that makes up the Dow Jones U.S. Index. The Dow Jones U.S. Index represents 95 percent of U.S. market capitalization and is watched by investors worldwide. The oldest index, the Dow Jones industrial average, first ...

    What Is a Bond Spread?

    There are many kinds of investment bonds, from a wide range of issuers. The interest rates or yields on these bonds vary based on several characteristics. A bond spread or yield spread is the difference in yield between two types of bonds. A bond yield spread shows exactly the ...

    The Real Rate of Return on I Bonds

    The Treasury’s Series I savings bond is guaranteed to provide a real rate of return, which is a return above the inflation rate. Inflation-protected returns are often underappreciated by savers when inflation is low. Yet anyone who has lived through the shocking effects of ...

    When Do Stocks & Bonds Go Up at the Same Time?

    Stock and bond prices usually move in opposite directions. When the stock market is not doing well and becomes risky for investors, investors withdraw their money and put it into bonds, which they consider safer. This increased demand raises bond prices. When stocks rally and ...

    Dollar Cost Averaging Vs. Buying and Holding

    Conservative investors have a couple of methods to choose from when buying stocks. With dollar cost averaging, investors put the same dollar amount into a stock, monthly or quarterly. If the stock goes up, they buy fewer shares. If the stock goes down, they get more shares for ...

    The Most Commonly Used Benchmarks for Investments

    Investors use benchmarks to evaluate the performance of individual investments and groups or portfolios of investments. Commonly used benchmarks in the United States include indexes that measure various investments and sections of the markets. Indexes that measure both broad ...

    What Does Short Interest Mean?

    Short interest gives you a sense of how pessimistic, or "bearish," the market is toward a particular stock's price. Investors who think the price of a stock is going to fall can bet money on their belief, and short interest tells you the extent to which they have done ...

    What Are 10 Tips for Creating Wealth in the Stock Market?

    Making money is the stock market is easy if you can just follow one simple piece of advice: Buy low, sell high. Of course, that advice is far easier said than done. While fortunes can be made or lost overnight in the stock market, creating wealth typically requires planning, ...

    When Can a Savings Bond Be Canceled?

    You can buy U.S. savings bonds for as little as $25. The principal and interested are backed by the full faith and credit of the U.S. government, and savings bonds are one of the few securities minors can own in their own names. Savings bonds are intended to be long-term ...

    How to Compute the Weighted Average of Shares Involving Stock Dividends & Stock Splits

    The number of outstanding shares a public corporation has over the course of the year can vary significantly. Stock splits, issuance of new shares to executives and conversion of bonds to common shares are just some of the reasons the share count can change. When computing key ...

    How to Play Stock Market Bubbles

    The dot.com stock market bubble and the more recent housing bubble are evidence of the stock market’s irrationality. Investor enthusiasm can turn into frenzied buying as stock prices reach one new high after another. Unrealistic expectations and overbought market ...

    How to Handle Zero Coupon Bond Maturity

    Many bonds offer periodic payments, or coupons, proportional to their face values. A zero-coupon bond offers no such payments; it just pays you its face value when it matures. When handling a zero-coupon bond, however, you cannot treat its worth as equal to its face value. Money ...

    Checklist Before Investing Money in a Business

    A well-thought-out investment strategy gives you an opportunity to make an exponential return on your investment, rather than a modest annual percentage, and gain more control over how the company spends your money. Whether you make a direct investment or purchase stock, you ...

    Common Stock Index

    A stock index is a tool that lets investors follow the rise and fall of share prices in a particular segment of the stock market or the entire market. In the United States, a common stock index follows the performance of the ordinary -- or common -- shares that come with voting ...

    Option & Volatility Trading Strategies

    Investors can select from several trading strategies to take advantage of high volatility options. These strategies can be used with all types of options, and they can be used weekly, monthly or on longer time frames. You can use a free online stock scanner to select a high ...

    What Is a Shareholder's Derivative Right?

    Shareholder derivative rights allow someone who owns stock in a company to sue on behalf of the company when the company refuses to do so itself. This suit is known as a shareholder derivative suit and is often used when a shareholder suspects the company's management or board ...

    How to Find an Investment Club

    An investment club is a group of investors who pool their resources to invest. It's typically structured as a partnership, so any gains pass straight-through to the individual members. Investors purchase membership stakes in the club, then meet to learn about investing and ...

    What Does the Nasdaq Number Mean?

    The Nasdaq composite index tells you how the stocks listed on the Nasdaq Stock Market are faring as a group. The Nasdaq composite is one of the most widely cited numbers in the financial news media. It's often quoted, along with the Dow Jones industrial average and the Standard ...

    When Could I Lose My Original Value in a Bond?

    When you invest in a bond, your money is at risk. You are lending money to a company or an agency, and you expect interest payments in return. Investors expect their money to be repaid by the issuing company or agency at the end of the bond term, or to be able to sell the bond ...

    Investment Banker Terms

    Investment banks are an integral part of corporate America and the financial markets, and yet the terms associated with the industry remain foreign to many. The world's largest investment banks are also part of global financial institutions, which in addition to investment ...

    How to Buy a Stock With a Stop Order

    A savvy investor sets a target price for a stock he wants to buy. When the stock reaches this price, the investor is ready to purchase it. Reasons for waiting for a certain price include making sure it's dropped low enough to be a bargain, or that it's risen high enough to ...

    The Economic Indicators for Equity Investing

    Economic indicators help to set the tone for the equity markets. Although the economic data released by U.S. government agencies tends to reflect trends in past weeks or months, taken together, the information is used as a gauge for economic health. Investors can examine ...

    The Advantages of Mortgage Bonds

    Mortgage-backed securities, or mortgage bonds, allow investors to earn higher yields than many standard treasury bonds, while also contributing to home ownership and the public good. When you buy a mortgage bond, you're helping to make funds available to potential homeowners ...

    Daily Stock Market Trends

    Although the stock market has long-term trends, investors can also spot daily trends. Opportunities develop by the hour, and an astute investor who knows what to look for can take advantage of them. Some daily trends signal the beginning of longer-term moves in the market. ...

    Are There Any Mutual Funds That Hold Gold Bullion?

    Many precious-metal mutual funds hold gold bullion. Some hold nothing but gold bullion; others maintain a mix of gold-related assets, such as futures contracts and mining stock. Some diversify into other precious metals such as platinum and palladium. In all cases, investors ...

    How Does the Stock Market Trading Floor Work?

    The traditional stock exchange was a place to buy and sell company shares, through the services of a stockbroker and his minions: the traders who did the actual buying, selling and negotiating on the exchange floor. With the rise of computerized trading in the 1990s, floor ...

    What Is a Two-for-One Stock Split?

    Companies are always looking for ways to encourage investors. One strategy is to give additional shares to existing stockholders. This tactic “splits” your investment up among a greater number of shares at a lower price per share. This may sound like a marketing ...

    How Do I Sell One Stock?

    If you are new to the stock market, you might not have a handle on all of the jargon used by investment professionals. It can be a little like going to court and hearing all of the lawyers throwing around legal terminology that is virtually incomprehensible to laymen. When it ...

    Does the Stock Market Affect the Housing Market?

    Macroeconomic variables, such as the stock market, building permits and housing starts, fluctuate in patterns that repeat themselves in predictable ways. As the economy pulls out of a recession, investors, anticipating increased home building, begin to buy construction-related ...

    Insider Trading Requirements

    Mention "insider trading," and names such as junk bond king Michael Milken and Enron’s Jeff Skilling immediately come to mind. Insider trading happens when someone uses information not available to the public to buy and sell securities. The penalties for insider ...

    Are Municipal Bonds Insured by the Federal Government?

    Municipal bonds are debt instruments issued by state and local governments to finance public projects such as roads and new public buildings. Like other bonds, municipal bonds carry risk that the bond issuer will default, meaning the bond issuer can’t make timely payments ...

    Penny Stocks Pros & Cons

    Penny stocks are equities that trade below $5 a share. They are issued by companies that are too small to meet the listing requirements of the NYSE or NASDAQ exchanges, so they trade through the Over-The-Counter Bulletin Board or Pink Sheet electronic quotation systems. As a ...

    Short-Term Bonds vs. Interest Rates

    Short-term bonds have maturities of three years or less. They tend to pay lower interest rates than other types of bonds. But in return, investors get the safety of having their money at risk for only a short period. Interest rates determine the value of short-term bonds. ...

    Risks of Preferred Stock

    Each share of a company's common stock represents an equal level of ownership in the company. Some companies also offer investors a different kind of stock, called preferred stock. When you own preferred stock, you get ownership in the company, plus preferential treatment when ...

    Stock Options or Profit Sharing

    “Dellionaires” are Dell employees who became millionaires by exercising employee stock options at the time of a spectacular increase in the company's stock price over the employee's option price. Outcomes such as this are one reason stock options are a popular ...

    The Risks of a Floating Interest Rate

    Floating interest rates appear in two contexts: floating-rate bonds and adjustable mortgages. As its name implies, the rate in question can move up or down depending on the prevailing rates. Both types of floating rate interest have risks, but the risks associated with each are ...

    What Are the Hours for the Dow Jones?

    The stock market news reports often focus on the value of the Dow Jones Industrial Average, a stock market index. The Dow Jones has been tracking stock market values for more than 100 years, and whether the Dow finishes the day up or down gives investors an idea how their own ...

    Does Minnesota Have a 529 Plan?

    529 plans are savings plans that allow people to set aside money to pay for college. Anyone can open a 529 plan for a beneficiary, whether the beneficiary is related or not. Every state in the U.S. has a 529 plan. The plan offered by Minnesota was ranked highly in 2011 by the ...

    Investments That Soar When Bond Prices Plunge

    Plunging bond prices are not good for bond investors, but savvy investors can find ways to profit from falling prices as well as rising price. Bond prices are tied to interest rates, and large rate changes usually take a significant period of time. However, if bond prices are ...

    Pros & Cons of Small Business Direct Investment

    Buying into a small business can be exciting for a variety of reasons, including the opportunity to be part of the company’s planning and activities and the chance to make a big return on your investment. Direct investment includes options such as starting your own ...

    What Is a Treasury Bond Rate?

    When discussing the rates or yields on Treasury securities, context is everything. What the investing public may think of as Treasury bonds covers several different types of debt securities and a zero-to-30-years yield curve. Mixed in among the different types of Treasuries is ...

    What Are Accumulated Retained Earnings?

    When a company earns enough money to pay its bills, invest in promising projects and put something aside for a rainy day, that rainy-day fund is retained earnings, or the accumulation of profits that have yet to be spent. Retained earnings accumulate every year in the portion of ...

    Which Stocks Are the Most Volatile?

    While stocks as an asset class can be labeled as volatile, some groups that tend to exhibit more dramatic performance than others. Volatile stock prices can produce jarring price swings within moments, days or weeks, and can turn investors' profits into losses with little ...

    How do I Arrange a Letter of Credit?

    A letter of credit guarantees one of the most essential parts of business -- that a company will get paid. Written by a financing institution or bank, a Letter of Credit (sometimes abbreviated LOC) assures a seller that the buyer has the ability to pay for a specific purchase. ...

    How Do I Invest in Chinese Stocks?

    Michelle Gibley, a director of international research with Charles Schwab, writes in "Why Invest Internationally" that international stocks tend to respond differently to market events than do other investment categories, such as small-cap stocks, and these markets ...

    Relationship Between Expenses & Stockholders' Equity

    The balance sheet of a corporation contains three categories of accounts: assets, liabilities and stockholders’ equity. If you subtract liabilities (what is owed to others) from assets (what the company owns), the difference is the stockholders’ equity (the ownership ...

    Define the Waterfall in a Hedge Fund

    If you're a hedge fund investor, understanding the fund's waterfall policy is essential. A waterfall explains how a fund's investors and manager get paid. It outlines who gets paid first and how much of a fund's profits an investor will receive. Waterfalls are included in the ...

    Are Short-Term Bonds More Sensitive to Interest Rates?

    Short-term bonds usually pay a lower yield than longer-term bonds. The trade-off is that the shorter-term securities are less volatile than long-term bonds. Changes in interest rates, which are the driving force behind bond prices, have a smaller effect on shorter-term bonds.

    Types of Convertible Bonds

    Convertible bonds can be turned into stock, subject to various restrictions. Like all bonds, they pay a coupon, or interest, rate and return their face value when they mature. Zero-coupon convertible bonds pay all interest at maturity. The distinctive feature of convertible ...

    How Do I Estimate Return on Investment?

    Though some investments have a better track record than others, it’s impossible to predict how much something will be worth in the future. When you’re comparing different investments, you must use estimated future values rather than knowing for sure how much ...

    Advantages & Disadvantages of Private Placement of Bonds

    A public offering of securities can reach an enormous number of potential investors, but it might also require extensive public disclosure of company information. Offering your bonds in a private placement may reduce the number of investors you can reach, but your potential ...

    The Relationship Between Bonds & Interest Rate

    Corporations and governments borrow money by selling bonds to investors like you. In turn, you want a good interest rate on the money you lend. The effective interest rate you get depends on several factors. Understanding the relationship between a bond prices and interest rates ...

    What Are the Types of Investment Bonds?

    Equity securities or debt instruments are the two main investment types. Equities are things you own, such as stock or real estate. Debt instruments are loans that earn interest, like certificates of deposit or bonds. Bonds break down further into three distinct types: ...

    What Are the Types of Insider Trading?

    Insider trading happens when a person has a piece of confidential information and then trades based on that information. This type of trading is illegal unless the trader, or the company, makes public disclosure of the information within a certain period of time. Several ...

    What Is the Meaning of Foreign Direct Investment?

    Foreign companies directly invested $83.4 billion in China's economy between January and September 2012, according to Reuters. Such foreign direct investment might include an American company building a plant in Mexico or establishing a joint venture with the Chinese government ...

    Called Bond Vs. Sunk Bond

    A common feature of all bonds is a specified maturity date. On that date, the bond is retired, and the bondholder receives the face value and any remaining interest due. However, bond issuers often require the flexibility to retire some or all of the bonds from a particular ...

    What Is Liquidity Risk Premium?

    Financial assets that change hands frequently in the market, such as stocks and bonds, are said to be liquid. Relatively obscure assets that are traded infrequently are referred to as illiquid. Because investors naturally prefer liquid assets, the illiquid ones must offer an ...

    When Do Call Options Expire?

    Options are financial contracts that allow the option holder to buy or sell a valuable asset at a predetermined price and on a specific date. A call option provides the right, but not the obligation, to buy something. A put option allows the option holder to sell an asset at a ...

    Preferred Shares Classification

    Corporations issue preferred shares to raise cash. Preferred shares always pay dividends. Their dividend yields — the annual dividend payment divided by the current stock price — are usually 2 to 4 percentage points higher than prevailing common stock yields. While ...

    Mutual Funds That Pay Monthly Dividends

    Many people need additional monthly income. For example, retirees may need to augment Social Security payments. For these people, mutual funds that produce a steady income stream may help satisfy this need. Depending upon the nature of the fund, such investments can increase ...

    Primary Disadvantages of Investing Internationally

    American investors have a number of ways to invest internationally. They can invest globally through mutual funds, exchange-traded funds, U.S.-traded foreign stocks, American depositary receipts, or direct investments in foreign companies. Although investing outside the United ...

    Voting Trust vs. Voting Proxy

    The voting proxy and voting trust are two different ways for a shareholder to give another party the right to vote for them. However, while the proxy may be a temporary or one-time arrangement, often created for a specific vote, the voting trust is usually more permanent, ...

    What Am I Buying When I Purchase a Share of Stock?

    If a business needs money to expand or pay debts, it can borrow money through bonds or sell investors a partial interest in the business through stocks. When you buy stock, each share represents a portion of ownership in the business that issues the stock. As a shareholder and ...

    How Much Should I Invest Per Year?

    Long-term investing will help ensure you have enough money to fund your retirement, while shorter-term investing can help you pay for a second home, send your kids to college or take the vacation of your dreams. The amount you should invest each year, or even the percentage of ...

    Are EE Bonds Worth Investing In?

    EE savings bonds have a guaranteed return and are safe and reliable investments. Common reasons to invest in EE savings bonds are to pay for a child's education, to supplement retirement income, to save in a low-risk and reliable manner or as gifts, according to the government's ...

    How to Scan Stocks for Price to Dividend Ratio

    Price to dividend ratio is used to analyze a company's potential as an investment and to compare performance among companies in the same industry. This PDR is the ratio of the current price of a share of a company's stock to its most recent annual dividends per share. With tens ...

    Stockbroker Education

    Stockbrokers are securities sales agents who assist clients in buying and selling securities and managing their investments. They suggest investment strategies and specific investment moves to their clients and help to recruit new clients for their employer. Brokers earn ...

    The Volatility of Stock Options

    Stock options are highly volatile financial instruments, which means that the value of stock options tend to move up and down a great deal in a short period of time. As a result, trading stock options can be far riskier than trading shares, and inexperienced investors are ...

    What Are the Benefits of Preferred Stock?

    Preferred stock offers investors the stability of a bond with the growth and flexibility of a stock. Preferred shares are similar to common stock with regard to ownership but also offer additional features relating to income and risk. Dividend payouts are typically higher and ...

    How to Invest in Petroleum

    Petroleum or crude oil may be the world's most important commodity. Petroleum is refined into fuel for every type of transportation, and the refining by-products are widely used to make plastics and chemicals. There exists a range of ways to invest in petroleum, depending on ...

    What Do Mutual Funds Really Do With Realized Returns?

    If you sell a stock for a profit, you have a realized gain and must report the gain on your taxes. A mutual fund will own a large number of stocks or other securities, so it stands to reason that a fund will generate realized gains and losses as stocks are bought and sold. A ...

    Muni Bond Market Size

    Municipal bonds are debt securities issued by state and local governments to finance a wide range of public projects, cover government operational needs and support private-sector projects through conduit financing that lowers private developers’ borrowing costs. Most of ...

    How to Purchase a U.S Treasury Bond

    You can buy 30-year U.S. Treasury Bonds direct from the Treasury without going through a bank or broker, via the TreasuryDirect.gov web site without paying any commissions or fees. The interest rate on 30-year Treasury Bonds is set through a competitive auction held each ...

    Defining Investment Risk

    Investing money comes with the risk that the investor could lose earnings and principal. Generally speaking, the greater the risk, the greater the potential reward, but even the safest investment types can become money pits in a world where complex forces are in play. These ...

    Municipal Bond Market Performance

    Municipal bonds are attractive investments because of their high yield compared to U.S. Treasury bonds and their relative security compared to corporate bonds. Analysts expect increased demand due to tax changes and continuing strong performance looking forward from the ...

    The Evaluation of the Risks of Stocks

    Investing in the right stocks can put you on the fast track to financial flexibility. Properly evaluating the risk of these stocks can be the difference between profit and loss. If you are not well versed in finance, it is difficult to know where to start. In fact, there ...

    What Are Restricted Shares of Stock?

    If you have received shares of stock after a merger, acquisition or consolidation, your shares may be subject to restrictions under Securities and Exchange Commission Rule 144. This rule protects other shareholders of the company by preventing a single party from selling large ...

    How Does a Stock Split Affect Dividend Growth Rate?

    Stock investing can be rewarding, but it is risky too. Predictions of future stock prices are notoriously hit and miss, no matter how much information is currently known about the stock. The best you can do as a stock buyer is study all the information at your disposal and make ...

    The Difference Between a 10-Year Treasury Bond & Treasury Tips Yield

    The choice between investing in a 10-year Treasury note and a 10-year Treasury Inflation Protected Security presents an interesting dilemma. The TIPS bond pays a much lower current yield than the Treasury note, but the value of a TIPS will be adjusted for inflation. The ...

    How to Sell Investment Diamonds

    Although diamonds are expensive and rare, they're often not the best investment. The price of many diamonds has been greatly inflated, particularly when the diamonds are set in jewelry. You can purchase investment diamonds and sell them, but there's no guarantee you'll get a ...

    Is Stockholders' Equity & Owners' Equity the Same?

    When you're talking about a corporation, the terms stockholders' equity and owners' equity mean the same thing. However, you'll only see the term stockholders' equity on the corporation's balance sheet. If you're referencing a sole proprietorship, the proper term is owner's ...

    Why Must a Bond Reach Par Value at Maturity?

    The issuer of a bond must provide a bond contract, or indenture, which specifies all of the rules governing the bond. The issuer is always obligated to pay back the bond’s face value, or par, at maturity. Failure to do so, or failure to make timely interest payments, ...

    Fact Sheet for Online Gold Investment

    The value of gold is often at its highest when paper currency is valued low or the economy is weak. Common ways to invest in gold online are to buy coins or bars through online dealers, purchase gold exchange-traded funds, invest in gold futures or buy stock in companies that ...

    Nasdaq Delisting Rules

    Upheaval in the public markets and in the economy can wreak havoc on some Nasdaq listings. Companies listed on the Nasdaq Stock Market must meet requirements for continued listing. If a company can't maintain the minimum requirements to remain listed, Nasdaq will delist it.

    What Are Bonds With Warrants?

    When you buy a bond with an attached warrant, the warrant gives you the right to buy a certain number of fixed-price shares of the stock of the company that issues the bond. You are not obligated to purchase the stock, and the price specified on the warrant may be different from ...

    What Is Long Stock Value?

    In investment terminology and jargon, "long" often has nothing to do with the length of anything. This word is used primarily to indicate the opposite of a "short" position. When you see "long stock value" on your account statement or brokerage ...

    What Is an Inverse Bond?

    The term “inverse bond” has two separate meanings for investors. It can refer to either an inverse bond fund or to an inverse floating-rate bond. In both cases, the normal results you would expect from a change in interest rates are turned upside down. You use ...

    Taxation of Stock Warrants

    A stock warrant is similar to a stock option in that both give you the right to purchase shares of the stock at a guaranteed strike price and you are able to exercise this right for a limited time. However, warrants are issued by a company for its own stock and are usually good ...

    What Items Are Reported as Paid-in Capital & Retained Earnings?

    Paid-in capital and retained earnings are two subsections of a corporation's balance sheet that represent the obligations the company has to its owners. They are subsections of the shareholders' equity section found after liabilities. A company's total assets equal its ...

    How to Find the IRR of an Annuity

    An investment's internal rate of return, or IRR, can give you an idea of the investment's profitability. In general, the higher the internal rate of return, the better, and a "good" investment is one in which the IRR is higher than the return you could get from doing ...

    Difference Between Growth & Dividend Reinvestment

    Investors buy stocks for a variety of reasons. Some are looking for a source of current income and favor stocks paying high dividends. Others are looking for rising stock prices and would prefer that a company reinvest its earnings into growing the company rather than paying out ...

    What Is a Mutual Fund Unit?

    A mutual fund company combines money from many people to make investments in stocks, bonds, money market instruments or some combination of these. Investors deal directly with the fund company or go through a broker, but they don't make their purchase from other investors or on ...

    8 Step Strategy Plan to Saving and Investing

    Saving and investing can be an intimidating process with even the best experts disagreeing about the best way to go about accomplishing these goals. However, having a clear plan and a commitment to accomplish these goals can help ensure that you are able to enjoy your golden ...

    The Relation Between Time to Maturity & Bond Price Volatility

    When investing in bonds, it is sometimes tempting to go for longer-term bonds with higher yields. As an investor, you need to be aware of the risks involved with different bond choices. One of those risks is the higher volatility of long-term bonds. The rate vs. volatility ...

    Are Silver & Gold Liquid Investments?

    Gold and silver investments gained popularity with both large and small investors during the period of instability in the global financial system after the Great Recession following the 2008 economic meltdown. While there are advantages and disadvantages that go along with ...

    What Is a Junk Bond?

    The use of the term "junk bond" came into popular use in the 1980s, when aggressive use of high-yield bond financing eventually led to the conviction of high-flying corporate financier Michael Milken. Using the terminology of high-yield or non-investment grade for ...

    About the Dilution of Stocks

    Holding stock shares of a company makes you a partial owner, entitled to benefit from earnings and vote at annual meetings. Earnings are the net income from operations after accounting for direct expenses, overhead, extraordinary gains and losses, interest and taxes. Earnings ...

    Can a Non-Accredited Investor Invest in a Self-Directed IRA?

    Investor accreditation and Individual Retirement Accounts (IRAs) are unrelated topics. Any investor can open a self-directed IRA, and having an IRA will not make you an accredited investor. IRAs can be managed for you, or you can choose to direct it yourself — no minimum ...

    The Risks of Tax Lien Investing and How to Avoid Them

    Property taxes are an important component of a county budget. When owners fail to pay their property taxes, the county tax collector issues tax liens to recoup the lost tax revenue. The tax liens are issued with high interest rates to entice investors to purchase them. The ...

    Impact of a Stock Split on a Financial Statement

    Corporations sometimes order a stock split to lower the price per share of their common stock. While a split has no financial impact, some corporation boards believe that it is psychologically difficult for investors to buy shares of expensive stock, customarily referring to ...

    What Impacts Preferred Stocks?

    Preferred stock is a special share class that usually entitles the holder to a predetermined and fixed annual payment. If the company runs into financial distress or enters bankruptcy, the rights and privileges of preferred stockholders are vastly different from those of common ...

    How to Buy Commodities Stock

    Commodities stocks are like regular stocks in that you can buy and sell them on the market. However, while stocks represent shares in specific companies, commodities stocks are shares in physical items, such as gold or corn. Commodities stocks do not generally follow the market ...

    What Is a Municipal Bond?

    Tax-exempt income is always an alluring prospect. For many investors, that’s the attraction of municipal bonds. However, tax exemptions alone don’t necessarily make a municipal bond the best investment. You want to look carefully at "munis," as these bonds ...

    Types of Equity Share

    An equity share in a corporation makes you a part owner of the business. However, shares come in various flavors and confer very different rights and privileges on the stockholder. While some allow you to have a say in how the company is run, others only entitle you to receive ...

    New York Stock Exchange Listing & De-Listing Requirements

    Getting listed on the New York Stock Exchange isn't something that happens accidentally. To be listed on any exchange, a company has to meet a set of stringent standards. After it makes it to the big board, the stock has to keep meeting minimum requirements or it will end up ...

    Is a Turnover of 630% Bad for a Mutual Fund?

    Two commonly referred to advantages of mutual funds are diversification and professional management of your investment dollars. On the down side, most actively managed mutual funds don't even match the market's comparable benchmark averages for return on your investment. One ...

    What Is an Employee Stock Option Plan in the Context of Fringe Benefits?

    One of the fringe benefits you might have offered to you in some companies is an employee stock ownership plan, or an ESOP. Depending on the company, it can be a promising investment opportunity. These plans confer on employees the right, but not the obligation, to purchase ...

    How to Buy COMEX Copper Contracts

    Copper is one of the most important base metals, and the metal is used by a wide range of industries. COMEX copper is the copper futures contract that trades on Commodity Exchange division of the New York Mercantile Exchange. With copper futures you can purchase contracts with ...

    What Is a Good Dividend Yield?

    What constitutes a good dividend yield is relative to the market conditions in a period in addition to the types of payments comparable companies are making. Generally speaking, a higher dividend yield is more attractive than a lower yield, because the yield reflects the types ...

    Titling a Certificate of Deposit

    The way you title a certificate of deposit affects your federal insurance coverage if your savings institution fails. To ensure coverage, choose a bank belonging to the Federal Deposit Insurance Corporation or a credit union belonging to the National Credit Union Administration. ...

    How to Trade With Candlesticks

    Candlestick charts are a colorful visual representation of price behavior. First used by Japanese rice traders, candlestick charts are equally useful when trading stocks, commodities and mutual funds. The candlesticks can indicate the overall market sentiment of a security along ...

    How to Figure Net Change Percentage for Stocks

    The net change percentage is a common statistic displayed in stock quotes on financial websites and in newspapers. This figure represents the difference between the stock’s most recent sale price and the previous day’s closing price as a percentage of the previous ...

    How to Invest in Wine

    Before you start investing in wine, it’s essential to examine the duration of your investment and how it aligns with your return goals. Although it can be profitable, the wine market is less liquid than traditional investment vehicles like stocks and bonds. Don't invest in ...

    What Happens to Stock Option Prices When the Stock Price Increase?

    A stock option contract guarantees you a specified “strike price” for a limited time. If it’s a call option, you can use, or exercise, the option to purchase a stated number of shares at the strike price. Put options allow you to sell shares at the strike ...

    How to Write a Cover Letter for Requesting a Prospectus

    Successful investors use prospectuses as a tool to help analyze risk and determine the possible rewards associated with investments such as stocks, bonds and mutual funds. There are two types of prospectuses, but each includes information such as the companies a mutual fund is ...

    How Retail ForexTrading Works

    The foreign currency exchange, or Forex, markets involve the trading of money for profit. Simply put, currency exchange rates are the costs of exchanging one country's currency for another country's currency. While large banks are the major players, retail Forex trading is ...

    How to Sell Calls for Income Using a Vertical Spread

    In the trading of call options, call buyers get the opportunity and call sellers get the money and an obligation to perform. Selling properly selected call options will generate income for a trading account. However, both broker requirements and the risk profile make selling ...

    How to Hedge Against Falling Stock Prices

    Owning stocks in a falling market is financially challenging, as you watch the value of your stock portfolio melt away with every downward price tick. Closing out the trade will contain your loss but also decimate your trading principal. If you think the market or your ...

    Simple Steps on How to Invest

    You have three basic options for your money. You can spend it, save it or invest it. But your best option might be a combination of all three. Spending money is not a problem for most of us. You have to buy groceries and put gas in the car, not to mention the kids' braces. ...

    How to Invest in a Falling Interest Rate Environment

    Investors often allocate 60 percent of their equity to stocks and 40 percent to bonds. The lower volatility of bonds increases the safety of the investment portfolio overall. But in a low interest rate environment this allocation may no longer be appropriate. While it's true ...

    Are Hedge Funds Influencing Politics?

    The hedge fund industry oversees $2.25 trillion as of 2012, according to Hedge Fund Research. Since the first hedge fund trade occurred in 1949, the hedge fund industry has evolved, and fund managers' influence in the capital markets and in political circles has grown. While ...

    Short Interest Vs. Free Float

    Profits can be made when the stock market is falling as well as rising. Instead of buying shares, investors open their trade by selling stock shares. Stock exchanges track the number of shares individual investors and financial institutions have sold short and report those ...

    How to Find Debt and Equity Percentages

    Debt percentage is the percentage of an asset funded by debt; equity percentage is the percentage of an asset funded by investment. Debt and equity percentages are relevant to many different types of assets, including real estate and personal property. The debt and equity ...

    The Four Major Economic Functions of Futures Commodity Markets

    When most people think of commodities futures exchanges, they probably envision a crowded trading pit exhibiting complete pandemonium. In spite of the apparent chaos, futures exchanges operate in an organized manner to provide vital economic functions, facilitating world trade ...

    How Can I Invest in Telecommunication?

    As you see everyone around you switching from regular cell phones to smartphones and to connected tablets, you have come to realize that telecommunications is a growth sector of the economy. And you are very correct. Forecasts for telecom revenue growth both in the U.S. and ...

    Conditions for Early Withdrawal of a Certificate of Deposit Without a Penalty

    Banks have the right, by law, to charge you penalties for withdrawing part or all of a certificate of deposit prior to its maturity date. Legally, the only conditions that prohibit banks from charging early withdrawal penalties are your death -- not a pleasant option -- or if ...

    What Is the Meaning of Ratings for Municipal Bonds?

    A bond rating is essentially a letter grade that an independent rating agency assigns to a bond. These ratings are usually the single most important factor in determining the demand for the bond and its yield. Understanding how ratings work is essential for investing not just in ...

    How to Use Fibonacci in Forex

    Foreign exchange, better known as Forex, currency traders use Fibonacci as a technical indicator. Leonardo Fibonacci, an Italian mathematician in the 12th century, discovered a sequence of numbers, along with their ratios, that frequently occur in nature. The idea is that the ...

    How Come My Stocks Are Going Up But the Amount I Can Buy on Margin Isn't?

    Buying on margin refers to the practice of borrowing money from your broker to purchase additional stock after exhausting the cash reserves in your account. How much money, if any, you can borrow depends on multiple factors. Under normal conditions, the amount you can borrow ...

    Difference Between Junk Bond Yields & Fed Funds Rate

    The best way to understand the difference between junk bond yields and the Fed funds rate is to envision a tall mountain. Fed funds yields are at the bottom, and the lowest credit quality junk bond yields are at the top. At intervals up from the bottom you first encounter U.S. ...

    How Much Money Can I Make if I Invest in a Growth Stock Mutual Fund for Five Years?

    Most experts consider growth stock mutual funds to be excellent long-term investments, particularly when held for 5 years or longer due to market volatility. The average return on a growth stock mutual fund is difficult to determine, as many variables are present. Every fund is ...

    Is the Stock Exchange an Efficient Market?

    When the government releases an economic report, the stock market reacts. When a crisis in the Middle East threatens to dispute oil production, the stock market reacts. Reactions such as these suggest that the stock market responds when news breaks. A market that absorbs ...

    How to Invest in Soybeans

    Soybeans are one of the largest agricultural crops produced in the Unites States. According to the EPA, approximately 2.8 billion bushels of soybeans were harvested from almost 73 million acres of cropland in the United States in 2000. This provides an enormous investment ...

    How to Use Just the MACD FOREX Chart

    Developed by Gerald Appel, the Moving Average Convergence-Divergence, or MACD, is an oscillator that measures price momentum. The indicator also measures the strength, direction and duration of a trend. Forex traders can use the MACD to confirm an entry price or exit point.

    When Do You Get a Check for Selling Stocks?

    If you sell shares of stock it will take at least 3 days for you to get the money. The process of selling -- or buying -- investments and handling the delivery of the securities and money is called trade settlement. Your broker will tell you that the sale of your stock is ...

    What Is Slippage in Forex?

    Slippage is a potential problem in all financial markets. A trader is said to suffer from slippage when a financial asset moves against him during the small lag between the time he enters an order and the order is executed. Particularly in forex, where traders make fairly small ...

    Price Change vs. Volatility

    In finance, volatility refers to how much the price of an asset tends to fluctuate, either up or down, over a specific period of time. A highly volatile stock or bond can be a profitable investment if caught near a bottom. When you buy near a top, however, the value of such ...

    Is a Negative Beta Coefficient More Risky Than a Positive in the Stock Market?

    When researching stocks for investment, take a glance at the "beta" number. This value measures the volatility of a stock compared with the volatility of the market as a whole. A high beta means the stock price is more sensitive to news and information, and will move ...

    Stocks That Have Dividend Reinvesting Plans

    If you want to be a long-term owner of dividend-paying stocks, dividend reinvestment plans offer a way to accumulate shares at your own pace and use any dividends to buy more shares. If you find a stock that has a history of regular dividend payments, odds are good that the ...

    Tips on Treasury Inflation-Protected Bonds

    Treasury Inflation-Protected Bonds are issued by the U.S. Treasury in maturities of five, 10 and 30 years. TIPS pay a fixed rate of interest, but the principal amount is adjusted every six months to reflect the current inflation rate as measured by the Consumer Price Index. All ...

    How to Find Fibonacci Turning Points on Intraday FOREX Charts

    An intraday Forex chart shows foreign currency price movements within the trading day. Fibonacci levels are horizontal price levels between the high and low points of an upward or downward price move that represent potential turning points. Five different Fibonacci levels are ...

    Can a 529 Savings Plan Be Transferred to Another College?

    A 529 savings plan, named after a section of the federal tax code, is a financial vehicle that helps you build wealth to pay college expenses. A central advantage of the 529 plan format is that funds grow tax-free, so that withdrawals for qualified college expenses are not ...

    What Happens to Stock Price When Short Interest Evaporates?

    Short interest in a stock doesn't evaporate as much as it's absorbed by the stock market. The traders who have sold the stock short control when the short interest is or will be reduced. A rapidly declining short interest in a particular stock probably means the stock price is ...

    About Reverse Floater Bonds

    Understanding the various types of instruments that make up your portfolio can help you make better investment decisions and meet your retirement and savings goals. The ideal portfolio contains a healthy mix of stocks and bonds, but it's easy to overlook non-traditional ...

    What Are the Top 5 Ways for a Retired Person to Invest Money?

    The best way to invest your retirement funds depends on your personal financial situation, whether you have a separate pension and what kinds of fixed expenses you have. Apart from such factors, you want to identify safe investments that generate reasonable income and protect ...

    How to Use Price Channels in FOREX

    Forex traders use price channels to identity potential buying and selling points. Price channels consist of two parallel lines that track the currency pair’s price movements. The currency pair’s prices fall between the two parallel lines. Price channels expand when ...

    Earnings Vs. EBITDA

    When investors inspect a firm’s income statement, they confront a series of earnings definitions, each including or excluding various expenses. The structure of the income statement places revenue, or sales, at the top and net income at the bottom. In between are a series ...

    How Do I Calculate Forex Rollover Rates?

    Trading in the foreign exchange -- or Forex -- market occurs in pairs. You buy one foreign currency while simultaneously selling another. If you have a trade open at the end of the trading day -- typically 5 p.m. Eastern time -- you earn interest on the purchased currency and ...

    How Do I Evaluate Market Share Prices for Common Stock?

    When you invest in a stock, you buy at the market price. Though the market prices suggest a stock’s value based on the wisdom of the crowds, markets can be erratic, because the market price of a stock can change rapidly and the stock prices of similar companies can be very ...

    How to Determine Expected Market Value of Stock

    A stock's market value changes continuously as investors trade shares. The actual value can be difficult to predict, because it is affected by unknown company developments, industry trends and broader economic changes. But the stock's expected market value is a figure you can ...

    How to Determine the Net Income for Stock Equity Statements

    A statement of stockholders' equity shows the changes to a company’s stockholders' equity during an accounting period. Stockholders' equity is an important figure to monitor when you own stock. It represents the accounting value of all stockholders’ stake in the ...

    How do I Delete Stocks From Yahoo Widget Finance?

    Yahoo's free finance widget is a small application that runs on your computer desktop and provides real-time stock prices, options, indexes, funds and other financial data. The widget is fully customizable -- it is up to you to decide which stocks and other financial data you ...

    Where Is the Serial Number on a Bond?

    While the federal government no longer issues federal Treasury bonds, including savings bonds, in a paper format, older certificates remain in circulation until the bond is redeemed. Some state and local governments and corporations, however, still issue bond certificates on ...

    Does Treasury Stock Affect Retained Earnings?

    Treasury stock is the name for previously sold shares that are reacquired by the issuing company. When a corporation buys back some of its issued and outstanding stock, the transaction affects retained earnings indirectly. Since both retained earnings and treasury stock are ...

    How to Determine a Trendline Formula

    A trendline on a graph passes through many data points, showing the correlation between the graph's variables. A horizontal trendline shows little correlation, and an increasingly vertical trendline shows an increasingly strong trend. Every trendline has an algebraic formula ...

    How do I Use Bollinger Bands in Forex?

    Forex currency traders use Bollinger Bands as technical indicators. Created by John Bollinger in the 1980s, Bollinger Bands were designed to ensure that 90 percent of a security’s price moves fall within the upper and lower bands. Bollinger Bands move as price moves, ...

    Bond vs. Redeemable Preferred Shares

    You have two basic options when it comes to investing your money: You can be a loaner or an owner. Loaners invest in debt instruments, such as bonds. Owners invest in equities, such as stocks. But there is a third option. You can invest in preferred stock, which is an equity ...

    How to Exercise Nonqualified Stock Options

    A lot of companies use nonqualified stock options, or NSOs, to motivate and retain valuable employees. An NSO grant allows you to buy stock in your company at a fixed exercise price. This means you can use the options to buy a specified number of shares. For example, you might ...

    Sponsored vs. Unsponsored ADR

    An American Depositary Receipt is a mechanism that allows shares of foreign companies to trade in the United States. An unsponsored ADR is not supported by the foreign company behind the ADR shares. The sponsorship of an ADR gives the foreign company greater visibility to ...

    How Do I Build an Income-Based Stock Portfolio?

    Investors can buy dividend-paying stocks to reap income. Stocks and funds of stocks that pay dividends can be selected carefully for future income. There are criteria that are used to screen for stocks that are most likely to continue paying dividends in the future.

    Is My Home Equity Part of a Retirement Portfolio?

    You should consider your home equity as part of your retirement portfolio. The ownership of a real estate property is an asset that can be beneficial to its owner, just like a stock or a bond is an asset. You can manage your finances more effectively when you understand how your ...

    Are Americans Allowed to Invest in Canadian Bonds & Bond Funds?

    When diversifying their portfolios, investors often find the Canadian market appealing because of that country's strong historical economic performance. Canadian bonds and bond funds can offer the benefits of foreign diversity and the safety of bond markets. U.S. residents can ...

    Sell Side vs. Buy Side

    Investors involved in the financial markets, whether it be the equity or debt markets, can generally benefit from in-depth research. That's exactly what buy-side and sell-side analysts provide -- they just do so for two separate demographics. Unless you work in financial ...

    The Advantages of the Presence of a Sinking Fund

    Despite its dismal-sounding name, a sinking fund actually confers advantages to bond investors. A sinking fund is money or negotiable securities set aside for the purpose of redeeming debt. Bonds backed by a sinking fund are less likely to default on interest payments and ...

    How to Take Advantage of Theta Decay in Options

    Options trades might at first seem intimidating and complex. But once mastered, traders come to appreciate two very important aspects of options. The first is that you can structure your trades so that you know your maximum loss in advance. Secondly, options are leveraged ...

    Dow Futures Vs. Fair Value

    When you see that the DOW futures are up on a morning financial program, you may be tempted to assume that means the market opening will be up as well. However, you have to understand the concept of fair value before you can make that determination. Fair value is a number that ...

    Picking Stocks for My Roth IRA

    Holdings in a Roth Individual Retirement Account (IRA) are exempt from future taxation. That means what you see is what you get when you are eligible to withdraw funds. With this in mind, investors should keep investments with the heaviest tax burden in their Roth IRA accounts. ...

    Nasdaq vs. OTC

    Before diving into the deep waters of stock investment research, familiarize yourself with the basics of stock exchanges. Most people know about the New York Stock Exchange and the popular market averages: the Dow Jones Industrial Average and the Standard & Poor's 500. When ...

    Bond Interest Rate Risks

    Bonds pay a fixed amount of interest yearly called the coupon. The interest rate is stated as a percentage of a bond’s par value, called the coupon rate. For instance, a $1,000 par value bond with a coupon of $50 has a coupon rate of 5 percent. This sounds simple, but the ...

    Effects of the Stock Market Crash

    All three major U.S. stock market crashes -- in 1929, 1987 and 2008 -- blindsided investors. For instance, in the year leading up to the crash of 1929, stocks were repeatedly reaching record high prices, and the bull market showed no signs of abating. However, in true crash ...

    Investment Company Act of 1940 and Mutual Funds

    The Investment Company Act of 1940 is the law that defines the rules under which a mutual fund operates. Mutual funds are one of several types of investment companies -- including closed-end funds and unit investment trusts -- covered under the act. The Investment Company Act ...

    How to Trade Tweezer Candles

    When a security is in an uptrend or downtrend, there is no guarantee how long the trend will last. Misjudge your timing and you could be caught in a trend reversal and stuck with a losing trade. Japanese candlesticks provide an instant snapshot of a security’s price ...

    Role of the Auto Industry in the Stock Market

    The auto industry and Wall Street have had a love-hate relationship since the big three U.S. automakers -- General Motors, Ford Motor and Chrysler -- started trading in the stock market in the early 20th century. The auto sector is one that has produced groundbreaking initial ...

    Call Options and Dividend Rights

    Call options give option buyers the right to buy the underlying stock. What happens to dividends paid by the underlying stock depends on whether you bought or sold the option. The ex-dividend date and whether or not the options were exercised also affect who earns a dividend. ...

    What Does "Retirement of Bond" Mean?

    Corporations and governments issue bonds to borrow money. When you invest in bonds, you lend money and receive income in the form of regular interest payments. At some point, the bond issuer pays back the borrowed money to retire the debt. As a bond owner, you get your money ...

    What Is the Difference Between NASD & NASDAQ?

    The 1938 Maloney Act amended the Securities and Exchange Act to provide for a self-regulating organization to oversee the operations of the over-the-counter market in securities. The organization that emerged from this legislation was the National Association of Securities ...

    How to Determine the Total Return of a Bond Fund

    A single bond produces returns in the form of periodic payments, or coupons. Each of these coupons is a percentage of the bond's par value, which the bond pays out when it matures. You may experience additional returns or a loss because of the difference between the bond's par ...

    Do Bond ETFs Pay a Dividend?

    Investing in bond exchange-traded funds is different than buying individual bonds. You get more diversification from ETFs because these funds contain numerous debt securities with different maturity dates. Also, bond ETFs trade on the major stock exchanges, so you can trade them ...

    What Effect Does a Spin-off Have on a Stock Price?

    When a company does a spin-off, a portion of that company's business becomes a new company. Since the spinner will now be a smaller company, it makes sense that the share price will drop. However, the "spinnee" company will have its own value. Investors in a company ...

    What Is LTP in the Stock Market?

    Shares of stock aren't priced like items on a store shelf, where a label tells you exactly what you'll pay. Stock prices are always in motion, rising and falling with the supply of shares available for sale and the demand for those shares. At any moment, the price you see for a ...

    The Difference Between Fair Market Value and Balance Sheet Value

    A company's balance sheet gives investors an idea of the total value of its assets, which has a host of implications for company valuation and measures of profitability and efficiency. However, it's critical to recognize that there is more than one way to measure value. Asset ...

    Can Fractional Shares Be Purchased in an ETF?

    The smallest trade you can make on a stock exchange is one share. Because exchange-traded funds trade as stock, you might find the idea of fractional ETF shares irrelevant. Yet you can accumulate fractional shares in an ETF, even if you can only buy and sell whole shares. Your ...

    How to Read FOREX Candlestick Charts

    Developed by Japanese rice traders in the 17th century, candlesticks are used today by securities traders. On a price chart, candlesticks provide an instant picture of a security’s price behavior over different time periods. Forex traders can read a candlestick chart to ...

    What Are Private Equity Special Opportunity Funds?

    It is the very nature of private equity firms to takeover businesses -- many of which are struggling in their operations -- and insert their own talent, professional expertise and financial resources to turn the businesses around. It is for this reason that many private equity ...

    Are Positively or Negatively Correlated Stocks Preferred?

    Correlation is a fundamental concept in statistics and one of the most frequently cited statistical measures in finance. Positively correlated stocks tend to move up and down together, while negatively correlated stocks tend to move in opposite directions. Combining negatively ...

    Why Invest in Domestic Stocks?

    Investing in stocks issued by companies operating in your country of residence provides numerous advantages. These include avoidance of exchange rate risk, ease of research and even physical access to the issuing company. In particular, novice investors should primarily ...

    Are CDs a Good Way to Invest Money?

    When the stock market ups and downs become too much for some investors, they turn to more traditional and safe ways to invest their money, including certificates of deposit. With a CD, you make a commitment to a bank to leave a specified sum of money on deposit for a specific ...

    How to Use Williams Indicators for FOREX

    The Williams’ Indicator, also known as the Williams’ %R (Williams’ Percent Range), is a leading indicator created by Larry Williams to measure market momentum. When applied to Forex, the Williams’ Indicator measures a currency pair’s trading ...

    How to Add Stocks to Pageonce

    Pageonce is an online financial management service that keeps track of your accounts and allows you to pay bills online. Pageonce can also track your investment accounts if you use one of their supported investment providers. All of the stocks in a particular investment account ...

    The Relationship Between Money Supply & Stock Prices

    Money supply is one of the most basic parameters in an economy and measures the abundance or scarcity of money. Stock prices tend to move higher when the money supply in an economy is high. Plenty of money circulating in the economy both makes more money available to invest in ...

    What Happens When Bonds Drop?

    Although it is usually the stock market that makes the news about rising or falling values, a drop in bond prices can be a significant news event. A change in bond values is strictly a mechanical event linked to changing interest rates. If you are a bond investor and see that ...

    How to Identify the Trend in the FOREX Market

    The Forex market is a global financial market where participants exchange one country's currency for another country's currency. The security that is traded among investors is a currency pair that fluctuates based on market sentiment. The currency markets trade actively 24 hours ...

    How to Avoid a Fake Entry in FOREX

    False Forex price breakouts can trick you into placing a fake entry. A fake entry is when you buy or sell a currency pair when the price breaks out of a support or resistance level. But instead of the price making the anticipated up or down move, it retraces back to the original ...

    The Best Investment Ratio Between Stocks & Bonds

    If you've ever had an ear infection, you know how a seemingly tiny thing can throw off your balance, causing the room to spin and making it difficult to stand up. Your investment portfolio shares a number of the same qualities as your inner ear. Small changes in the financial ...

    Definition of Accrued Earnings

    Accrued earnings are income or other revenue earned during a specified fiscal period but not received until the next or future fiscal periods. Most larger companies use the accrual method of accounting, meaning that earnings and expenses are entered into their books and records ...

    Does a Stock Buyback Affect the Price?

    Corporations institute stock buyback programs to reduce the number of shares available for trading. A corporation normally executes a buyback program by repurchasing shares of its own stock at current prices in the open market. The usual effect of such programs is to boost the ...

    Assumptions of Yield to Maturity Calculations

    The yield to maturity of a bond tells you the rate you will earn on your investment based on the price you pay for the bond, the regular interest payments you will receive while you own the bond and the payment you will receive when the bond matures. The calculations of yield ...

    Does Preferred Stock Appreciate in Value?

    Corporations issue preferred stock to raise money. Since preferred stock is not debt, the money raised does not have to be repaid. Preferred shares provide higher dividends than do common shares, but they don’t gain value from the growth of the issuing company, because ...

    The Relationship Between Yield to Maturity and Internal Rate of Return

    Bonds and other fixed-income investments -- that is, investments that provide regular, equal payments -- are commonly quoted according to their effective interest rate, known as "yield to maturity." All investments, meanwhile, have an internal rate of return, or the ...

    How do I Invest in the Dinar?

    Currency speculation can be risky especially when the country issuing the currency is fraught with internal problems. The dinar is the currency of Iraq, a country that was trying to emerge from a long war and grappling with high unemployment, widespread corruption and social ...

    On-the-Run Treasuries Vs. Off-the-Run

    The price and yield quotes for Treasury securities published both in the papers and online will note that the yields are for on-the-run Treasuries. These are the most recent issues of the different types of Treasury securities. If you want to buy Treasuries for your portfolio, ...

    Municipal Bonds Vs. Savings Accounts

    Municipal bonds and savings accounts are both members of the liquid assets family, but the two investments have some major differences. For starters, savings accounts are the ultimate liquid asset in that you can usually avoid paying transaction fees to withdraw it from the bank ...

    When Does a Q Get Removed From a Stock Symbol?

    The letter “Q” added to the end of a stock symbol is not a good sign for investors; “Q” means the company is in the midst of bankruptcy proceedings. The SEC warns investors to steer clear of “Q” stock, unless you’ve carefully reviewed ...

    Redeemable Vs. Retractable Preferred Shares

    Corporations issue preferred stock to raise funds. Preferred stock differs from common stock in several important ways. A corporation’s preferred stock yields higher dividends than does its common stock and the company must pay all preferred dividends before paying any ...

    The Differences Between Common Stock Outstanding & Issued

    When studying the annual report of a corporation, you may notice that the number of shares issued by the company exceeds the number of outstanding shares. In such cases, you will also see an additional item in the financial statements, called treasury stock. Understanding these ...

    How do I Create a Stock Portfolio for Paper Trading?

    The term "paper trading" refers to the days when new traders would practice their stock market skills by creating a paper ledger or writing down imaginary trades in a notebook. You can do this electronically today. You pretend you have invested money in specific stocks ...

    How to Invest in Scandinavia

    The Scandinavian countries offer a sort of alternative European investment choice. Three of the four countries in the region have their own currencies, setting them apart from the Euro zone, and there is a greater emphasis on natural resources and energy investment across the ...

    Do Bonds Pay a Variable Interest Rate Monthly?

    Most bonds periodically pay a fixed amount of interest throughout the year. A floating-rate bond operates differently -- the bond issuer regularly adjusts the interest rate on a floater to match some well-known rate, such as LIBOR or the Fed Funds rate. Because floating-rate ...

    How to Forecast the Stock Market

    There are many techniques to use to forecast the stock market. However, experts often say that, regardless of technique, accurately forecasting stock market performance is more a matter of luck than technique. Having an expectation of how the stock market might perform, ...

    The Net of Tax Effect on Retained Earnings

    Investors can benefit from fully understanding financial reporting. A business that experiences an extraordinary event or closes down a subsidiary might need to report a related gain or loss. For example, if you own a newspaper business and lose a libel suit, you may have to pay ...

    How Do Outstanding Shares Fluctuate?

    A company's stock price depends on how much of the company's earnings the stockholder with a single stock can lay claim to. This figure in turn depends on how many outstanding shares the corporation has. The larger the number of shares, the greater the number of claimants to the ...

    How Much Does a Stock Price Have to Be to Be Marginable?

    Margin is the practice of borrowing money to buy stock. Using margin can help to increase the impact of a growing market, but it also increases the risk that you face in a declining market. Both the Financial Industry Regulatory Authority, Inc., usually called FINRA, and the ...

    How to Invest for Prosperity

    U.S. households saw a drop of 28 percent in their median wealth between 2005 and 2009. Households that had a financial well-being or net worth of $96,894 in 2005 saw that fall to less than $70,000 in 2009. As the U.S. economy struggles to recover after the housing crash that ...

    How to Use Hedging in FOREX Trading

    Traders look to profit from changes in a foreign currency pair’s (Forex) price. Traders apply technical analysis to determine optimal entry and exit points. If the analysis is correct, the investor will earn a profit. But the Forex market can also hand traders a loss ...

    Hedge Fund Trading Strategy

    While individual funds generally have an individual strategy assigned to them, that approach could be one of numerous investment styles. A fund's investment strategy is generally a function of a hedge fund manager's expertise and experience or in response to opportunities in the ...

    The Relationship of Income Tax Expense to Income Tax Payable

    An investor reviewing the financial statements of a corporation might have a tough time figuring out how much that company paid in income taxes. That's because of differences between the accounting standards that underpin financial statements and the rules in place for preparing ...

    What Stocks to Have When Stocks Are Doing Badly?

    Certain stocks, often referred to as "defensive" ones, can maintain their performance during good and bad times. Some even increase in value during economic slumps. A good bit of overlap exists between types of stock, and many companies' stocks can fit into numerous ...

    Is a Certificate of Deposit a Capital Asset?

    Things that you own for your own personal use, investment or pleasure are considered capital assets. Common examples of capital assets are your home, your car or stocks and bonds. Generally, a capital asset can be purchased or sold, either at a gain, or profit, or potentially at ...

    Can I Just Transfer Over Mutual Funds to Another Brokerage House?

    You are not tied to a single brokerage house for your investments, including mutual fund holdings. The financial industry has an electronic transfer system for moving securities from one broker to another. Mutual fund investments are a special case; the transfer details depend ...

    Diluted Vs. Undiluted Shares

    When people use the terms “diluted shares” or “undiluted shares,” they are generally speaking about a publicly held company’s earnings per share. Diluted and undiluted earnings both provide snapshots of a company’s financial health. Briefly, ...

    Are Prospectuses Still Required for Selling Mutual Funds?

    Mutual fund companies offer their customers professional management of stocks, bonds, commodities and other investments. The funds sell shares to investors and invest their assets in diversified portfolios, according to a specific investment philosophy. Potential buyers can find ...

    What Are Tax Exempt Mortgage Revenue Bonds?

    Mortgage revenue bonds issued by your state or local housing authority offer a double or even triple benefit investment. The money raised by mortgage revenue bonds is used to support local housing and first-time home buyers. As an investor in mortgage revenue bonds you receive ...

    Tax Payable vs. Deferred Income Tax Liability

    As an investor, you should know that most companies keep two sets of books, but not for any nefarious reasons. One set reflects the requirements of financial reporting, while the other keeps track of accounts from the point of view of the Internal Revenue Service. Corporations ...

    How to Read Price Action in FOREX Charts

    Foreign exchange currency trading (Forex) presents an investor with unique challenges. Unlike the New York Stock Exchange or Nasdaq, there is no formal exchange. Forex traders buy and sell currency pairs through their online Forex broker. The Forex broker often takes the ...

    How to Buy Stock When the Market Is Closed

    Just because the stock markets close at 4 pm does not mean that trading stops. Thanks to the ECN, or Electronic Communication Networks, you can still place trades through your online trading account. There are some unique challenges traders face when using the ECN. Because the ...