Month: February 2020

In modern biology, natural selection is a process whereby species which have traits that enable them to adapt in an environment survive and reproduce, and then pass on their genes to the next generation. Natural selection means that species that can adapt to a specific environment will grow in numbers and eventually greatly outnumber those species that cannot adapt.

The Qualified Special Representative Agreement (QSR) is an agreement between broker-dealers to clear trades without interaction with the NASDAQ ACT system. The QSR allows one broker-dealer to send trades directly to the National Securities Clearing Corporation on behalf of another broker-dealer. This method of clearing trades provides simpler processing, lower transaction costs and extended trading hours.

A short squeeze occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall to buy it in order to forestall even greater losses. Their scramble to buy only adds to the upward pressure on the stock’s price.

Form 1099-INT is the IRS tax form used to report interest income. The form is issued by all payers of interest income to investors at year end. It includes a breakdown of all types of interest income and related expenses. Payers must issue a 1099-INT for any party to whom they paid at least $10 of interest during the year.

A like-kind exchange, sometimes styled as a like kind exchange, is a tax-deferred transaction that allows for the disposal of an asset and the acquisition of another similar asset without generating a capital gains tax liability from the sale of the first asset.

Tail risk is a form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution. Tail risks include events that have a small probability of occurring, and occur at both ends of a normal distribution curve.

A counteroffer is a response given to an initial offer. A counteroffer means the original offer was rejected and replaced with another one. The counteroffer gives the original offerer three options: accept the counteroffer, reject it, or make another offer.

A high-yield investment program (HYIP) is a fraudulent investment scheme that purports to deliver extraordinarily high returns on investment. High-yield investment schemes often advertise yields of more than 100% per year in order to lure in victims. In reality, these high-yield investment programs are Ponzi schemes, and the organizers aim to steal the money invested. In a Ponzi scheme, money from new investors is taken to pay returns to established investors. Money is not invested and no actual underlying returns are earned; new money is just used to pay people who entered the scam earlier than they did.

Marginal revenue is the increase in revenue that results from the sale of one additional unit of output. While marginal revenue can remain constant over a certain level of output, it follows the law of diminishing returns and will eventually slow down as the output level increases. Perfectly competitive firms continue producing output until marginal revenue equals marginal cost.