Month: February 2020

The internal rate of return (IRR) rule is a guideline for deciding whether to proceed with a project or investment. The rule states that a project should be pursued if the internal rate of return is greater than the minimum required rate of return. That is, the project looks profitable.

Debt security refers to a debt instrument, such as a government bond, corporate bond, certificate of deposit (CD), municipal bond, or preferred stock, that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount borrowed), interest rate, and maturity and renewal date. It also includes collateralized securities, such as collateralized debt obligations (CDOs), collateralized mortgage obligations (CMOs), mortgage-backed securities issued by the Government National Mortgage Association (GNMAs) and zero-coupon securities. read more

The London Stock Exchange (LSE) is the primary stock exchange in the United Kingdom and the largest in Europe. Originated more than 300 years ago, the regional exchanges were merged in 1973 to form the Stock Exchange of Great Britain and Ireland, later renamed the London Stock Exchange (LSE). The Financial Times Stock Exchange (FTSE) 100 Share Index, or Footsie, is the dominant index, containing 100 of the top blue-chip stocks on the LSE.

The term housing unit refers to a single unit within a larger structure that can be used by an individual or household to eat, sleep, and live. The unit can be in any type of residence such as a house, apartment, mobile home or may also be a single unit in a group of rooms. Essentially, a housing unit is deemed to be a separate living quarter where the occupants live and eat separately from other residents of the structure or building. They also have direct access from the building’s exterior or through a common hallway. read more

An offset involves assuming an opposite position in relation to an original opening position in the securities markets. For example, if you are long 100 shares of XYZ, selling 100 shares of XYZ would be the offsetting position. An offsetting position can also be generated through hedging instruments, such as futures or options.

Cyclical unemployment is the component of overall unemployment that results directly from cycles of economic upturn and downturn. Unemployment typically rises during recessions and declines during economic expansions. Moderating cyclical unemployment during recessions is a major motivation behind the study of economics and the goal of the various policy tools that governments employ to stimulate the economy.

The Resolution Trust Corporation (RTC) is a now-defunct temporary federal agency. From 1989 to 1995, it largely resolved the savings and loan (S&L) crisis of the 1980s, which resulted in about a third of such U.S. institutions failing within a 10-year span. The RTC became a massive property-management company, cleaning up what was, at the time, the largest collapse of U.S. financial institutions since the Great Depression.

The Securities and Exchange Commission (SEC) Schedule 13G form is an alternative filing for the Schedule 13D form and is used to report a party’s ownership of stock which exceeds 5% of a company’s total stock issue. Schedule 13G is a shorter version of Schedule 13D with fewer reporting requirements. Schedule 13G can be filed in lieu of the SEC Schedule 13D form as long as the filer meets one of several exemptions.

Weather insurance is a type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable temperatures or other adverse, measurable weather conditions. Weather insurance is used to insure an expensive event that could be ruined by bad weather, like an outdoor wedding or an outdoor film production.

A broker is an individual or firm that acts as an intermediary between an investor and a securities exchange. Because securities exchanges only accept orders from individuals or firms who are members of that exchange, individual traders and investors need the services of exchange members. Brokers provide that service and are compensated in various ways, either through commissions, fees or through being paid by the exchange itself.