Category: Investments glossary

Market breadth indicators analyze the number of stocks advancing relative to those that are declining in a given index or on a stock exchange (such as the New York Stock Exchange or NASDAQ). Positive market breadth occurs when more stocks are advancing than are declining. This suggests that the bulls are in control of the market’s momentum and helps confirm a price rise in the index. Conversely, a disproportional number of declining securities is used to confirm bearish momentum and a downside move in the stock index. read more

The International Labor Organization is a United Nations (UN) agency that aims to promote decent work throughout the world.

Excess cash flow is a term used in loan agreements or bond indentures and refers to the portion of cash flows of a company that are often required to be paid by a lender. Excess cash flow is typically cash received or generated by a company that triggers a payment to the lender as stipulated in the credit agreement. Since the company has an outstanding loan with the creditor, certain cash flows are subject to various restrictions for usage by the company.

Excess cash flow is a term used in loan agreements or bond indentures and refers to the portion of cash flows of a company that are often required to be paid by a lender. Excess cash flow is typically cash received or generated by a company that triggers a payment to the lender as stipulated in the credit agreement. Since the company has an outstanding loan with the creditor, certain cash flows are subject to various restrictions for usage by the company.

A hybrid annuity is a retirement income investment that allows investors to split their funds between fixed-rate and variable-rate components. Investors can divide their savings between conservative assets that offer a low but guaranteed rate of return and riskier assets that offer the potential for higher returns. As in any annuity, the goal is to create a steady stream of income during retirement.

Total-debt-to-total-assets is a leverage ratio that defines the total amount of debt relative to assets owned by a company. Using this metric, analysts can compare one company’s leverage with that of other companies in the same industry. This information can reflect how financially stable a company is. The higher the ratio, the higher the degree of leverage (DoL) and, consequently, the higher the risk of investing in that company.

A fund of funds (FOF)—also known as a multi-manager investment—is a pooled investment fund that invests in other types of funds. In other words, its portfolio contains different underlying portfolios of other funds. These holdings replace any investing directly in bonds, stocks, and other types of securities.

Employment Insurance (EI) is an unemployment insurance program in Canada that allows individuals who have recently lost a job to receive temporary financial assistance. Employment insurance can also be extended to individuals who are unable to work because of illness or who are caring for a young child or a seriously ill family member. In addition to financial assistance, the program assists the unemployed with job search services.

A liquidity trap is a contradictory economic situation in which interest rates are very low and savings rates are high, rendering monetary policy ineffective. First described by economist John Maynard Keynes, during a liquidity trap, consumers choose to avoid bonds and keep their funds in cash savings because of the prevailing belief that interest rates could soon rise (which would push bond prices down). Because bonds have an inverse relationship to interest rates, many consumers do not want to hold an asset with a price that is expected to decline. At the same time, central bank efforts to spur economic activity are hampered as they are unable to lower interest rates further to incentivize investors and consumers. read more

A take-out loan is a type of long-term financing that replaces short-term interim financing. Such loans are usually mortgages with fixed payments that are amortizing. Institutions that issue take-out loans are normally large financial conglomerates, such as insurance or investment companies, while banks or savings and loan companies usually issue short-term loans, such as a construction loan.