Month: October 2020

The Negative Volume Index is a technical indication line that integrates volume and price to graphically show how price movements are affected from down volume days.

Thomas Robert Malthus was a famous 18th-century British economist known for the population growth philosophies outlined in his 1798 book An Essay on the Principle of Population. In it, Malthus theorized that populations would continue expanding until growth is stopped or reversed by disease, famine, war, or calamity. He is also known for developing an exponential formula used to forecast population growth, which is currently known as the Malthusian growth model.

A rebate is the portion of interest or dividends earned by the owner (lender) of a stock that is paid by a short seller (borrower) of the stock. The borrower is required to pay interest and dividends to the owner. Short selling requires a margin account.

A derivative is a financial security with a value that is reliant upon or derived from, an underlying asset or group of assets—a benchmark. The derivative itself is a contract between two or more parties, and the derivative derives its price from fluctuations in the underlying asset.

A margin account is a brokerage account in which the broker lends the customer cash to purchase stocks or other financial products. The loan in the account is collateralized by the securities purchased and cash, and comes with a periodic interest rate. Because the customer is investing with borrowed money, the customer is using leverage which will magnify profits and losses for the customer.

The phrase, taper tantrum, describes the 2013 surge in U.S. Treasury yields, resulting from the Federal Reserve’s (Fed) announcement of future tapering of its policy of quantitative easing. The Fed announced that it would be reducing the pace of its purchases of Treasury bonds, to reduce the amount of money it was feeding into the economy. The ensuing rise in bond yields in reaction to the announcement was referred to as a taper tantrum in financial media.

A special purpose acquisition company (SPAC) is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. Also known as blank check companies, SPACs have been around for decades. In recent years, they’ve gone mainstream, attracting big-name underwriters and investors and raising a record amount of IPO money in 2019.

Jerome Kerviel was a junior level derivatives trader for French securities firm Société Générale. He was charged with losing more than €4.9 billion in company assets by conducting a series of unauthorized and false trades between 2006 and early 2008. When company managers discovered that Kerviel had conducted tens of billions of euros worth of unauthorized trades, they rushed to close out the open positions (most of which were specialized equity arbitrage trades) and contain the extent of the fraud. Several of the trades were closed out with heavy losses due to a falling market at the time of sale. read more

An annualized rate of return is calculated as the equivalent annual return an investor receives over a given period. The Global Investment Performance Standards dictate that returns of portfolios or composites for periods of less than one year may not be annualized. This prevents projected performance in the remainder of the year from occurring.

Earnings before interest after taxes (EBIAT) is a financial measure that is an indicator of a company’s operating performance. EBIAT, which is equivalent to after-tax EBIT, measures a company’s profitability without taking into account the capital structure, like ratios such as debt to equity. EBIAT measures a company’s ability to generate income from its operations for a specified time period.