Category: Investments glossary

A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits.

A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits.

A global bond is a type of bond that can be traded in a domestic or European market. It is a bond issued and traded outside the country where the currency of the bond is denominated. This type of bond is issued by a non-European company but sells in a European country or any other foreign market. For example, a U.S. corporation can issue a bond in Europe. These bonds are sold in various maturities and credit qualities.

The health insurance marketplace is a platform which offers insurance plans to individuals, families or small businesses. The Affordable Care Act of 2010 established the marketplace as a means to achieve maximum compliance with the mandate that all Americans carry some form of health insurance. Many states offer their own marketplaces, while the federal government manages an exchange open to residents of other states.

The TED spread is the difference between the three-month Treasury bill and the three-month LIBOR based in US dollars. To put it another way, the TED spread is the difference between the interest rate on short-term US government debt and the interest rate on interbank loans.

A bear spread is an options strategy implemented by an investor who is mildly bearish and wants to maximize profit while minimizing losses. The goal is to net the investor a profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale of either puts or calls for the same underlying contract with the same expiration date but at different strike prices.

An income stock is an equity security that pays regular, often steadily increasing dividends. Income stocks usually offer a high yield that may generate the majority of the security’s overall returns. While there is no specific breakpoint for classification, most income stocks have lower levels of volatility than the overall stock market, and offer higher-than-market dividend yields.

ISM Manufacturing Index, which used to be called Purchasing Manager’s Index (PMI), measures manufacturing activity based on a monthly survey, conducted by Institute for Supply Management (ISM), of purchasing managers at more than 300 manufacturing firms.

The one-third rule estimates change in labor productivity based on changes in capital devoted to labor. The rule is used to determine the impact that changes in technology or capital have on production.

Yield-based option is a type of option that derives its value from the difference between the exercise price (expressed as a percentage) and the yield of the underlying debt instrument. Yield-based options are settled in cash.