Relative strength is a technique used in momentum investing. It consists of investing in securities that have performed well, relative to their market or benchmark. For example, a relative strength investor might select technology companies that have outperformed the Nasdaq Composite Index.
The flat yield curve is a yield curve in which there is little difference between short-term and long-term rates for bonds of the same credit quality. This type of yield curve flattening is often seen during transitions between normal and inverted curves. The difference between a flat yield curve and a normal yield curve is that a normal yield curve slopes upward.
The loan-to-deposit ratio (LDR) is used to assess a bank’s liquidity by comparing a bank’s total loans to its total deposits for the same period. The LDR is expressed as a percentage. If the ratio is too high, it means that the bank may not have enough liquidity to cover any unforeseen fund requirements. Conversely, if the ratio is too low, the bank may not be earning as much as it could be.
Near the money refers to an options contract whose strike price is close to the current market price of the corresponding underlying security. Close to the money is an alternative phrase, designating the same situation. While a call option can be considered “in the money” if its strike price is lower than the market price, the option is considered near the money if its strike price is lower than the market price but extremely close to it. However, if the strike price is higher than the market price, it is considered out of the money. Near the money is one of the three states of option moneyness, along with in the money and out of the money.
Uninsurable property is a home that is not eligible for insurance through the Federal Housing Administration (FHA) because it is in need of extensive repairs. An uninsurable property is typically ineligible for a mortgage through the FHA; however, in certain cases, the individual purchasing the home may qualify for alternative FHA financing options.
A qualified exchange accommodation arrangement is a tax strategy where a third party, known as the accommodation party, temporarily holds a real estate investor’s relinquished or replacement property.
Uninsurable property is a home that is not eligible for insurance through the Federal Housing Administration (FHA) because it is in need of extensive repairs. An uninsurable property is typically ineligible for a mortgage through the FHA; however, in certain cases, the individual purchasing the home may qualify for alternative FHA financing options.
A qualified exchange accommodation arrangement is a tax strategy where a third party, known as the accommodation party, temporarily holds a real estate investor’s relinquished or replacement property.
The average annual growth rate (AAGR) is the average increase in the value of an individual investment, portfolio, asset, or cash stream over the period of a year. It is calculated by taking the arithmetic mean of a series of growth rates. The average annual growth rate can be calculated for any investment, but it will not include any measure of the investment’s overall risk, as measured by its price volatility.
Kicking the tires is a slang term for performing minimal research into an investment, as opposed to conducting a thorough and rigorous analysis. The process usually includes a cursory reading of the company’s annual report, looking at its historical earning and revenue performance, considering the company’s competitive strengths and weaknesses and reading news articles about the company.