Zero-sum is a situation in game theory in which one person’s gain is equivalent to another’s loss, so the net change in wealth or benefit is zero. A zero-sum game may have as few as two players or as many as millions of participants. In financial markets, options and futures are examples of zero-sum games, excluding transaction costs. For every person who gains on a contract, there is a counter-party who loses.
Seed capital is the initial funding used to begin creating a business or a new product. Obtaining seed capital is the first of four funding stages required for a startup to become an established business.
A line chart is a graphical representation of an asset’s historical price action that connects a series of data points with a continuous line. This is the most basic type of chart used in finance and typically only depicts a security’s closing prices over time. Line charts can be used on any timeframe, but most often using day-to-day price changes.
Ripple is a term used to conceptualize the day-to-day fluctuations in stock market prices. It has been discussed throughout the evolution of Dow Theory, a basic framework for technical analysis investing.
A line chart is a graphical representation of an asset’s historical price action that connects a series of data points with a continuous line. This is the most basic type of chart used in finance and typically only depicts a security’s closing prices over time. Line charts can be used on any timeframe, but most often using day-to-day price changes.
Ripple is a term used to conceptualize the day-to-day fluctuations in stock market prices. It has been discussed throughout the evolution of Dow Theory, a basic framework for technical analysis investing.
A strike price is the set price at which a derivative contract can be bought or sold when it is exercised. For call options, the strike price is where the security can be bought by the option holder; for put options, the strike price is the price at which the security can be sold.
An amortization schedule is a complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term. While each periodic payment is the same amount early in the schedule, the majority of each payment is what is owed in interest; later in the schedule, the majority of each payment covers the loan’s principal. The last line of the schedule shows the borrower’s total interest and principal payments for the entire loan term.
Duration is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates. A bond’s duration is easily confused with its term or time to maturity because they are both measured in years. However, a bond’s term is a linear measure of the years until repayment of principal is due; it does not change with the interest rate environment. Duration, on the other hand is non-linear and accelerates as time to maturity lessens.
A business exit strategy is an entrepreneur’s strategic plan to sell his or her ownership in a company to investors or another company. An exit strategy gives a business owner a way to reduce or liquidate his stake in a business and, if the business is successful, make a substantial profit. If the business is not successful, an exit strategy (or exit plan) enables the entrepreneur to limit losses. An exit strategy may also be used by an investor such as a venture capitalist in order to plan for a cash out of an investment.