Investments glossary terminology
World insurance is a commercial liability policy with extended global coverage. World insurance provides coverage in the event the policyholder is sued anywhere in the world. In general, however, commercial liability policies have a geographic limit for coverage. It is common for companies with global operations or who have contracts with international partners/associates to purchase this type of world coverage.
Binomial distribution is a probability distribution that summarizes the likelihood that a value will take one of two independent values under a given set of parameters or assumptions. The underlying assumptions of the binomial distribution are that there is only one outcome for each trial, that each trial has the same probability of success, and that each trial is mutually exclusive, or independent of each other.
The Fed balance sheet is a breakdown of the assets and liabilities held by the Federal Reserve. In the United States, the Federal Reserve is the central bank founded by Congress in 1913 to ensure the stability and safety of the nation’s financial and monetary structures. The Fed balance sheet is a report that essentially outlines the factors that affect both the supply and the absorption of Federal Reserve funds. The Fed balance sheet report reveals the means the Fed uses to inject cash into the economy. The report is formally known as the Factors Affecting Reserve Balances.
A wash sale is a transaction in which an investor seeks to maximize tax benefits by selling a losing security at the end of a calendar year so they can claim a capital loss on taxes that year. The investor’s intent is likely to repurchase the security again after the start of the new year, if possible even lower than where they sold. Such wash sales are a method investors have historically considered to recognize a tax loss without limiting their exposure to opportunity they perceive in owning a particular security. The IRS uses the wash-sale rule to eliminate the incentive to arbitrarily sell and reacquire the same security around the end of the calendar years.
Wage push inflation is an overall rise in the cost of goods that results from a rise in wages. To maintain corporate profits after an increase in wages, employers must increase the prices they charge for the goods and services they provide. The overall increased cost of goods and services has a circular effect on the wage increase; eventually, as goods and services in the market overall increase, higher wages will be needed to compensate for the increased prices of consumer goods.
A discount bond is a bond that is issued for less than its par—or face—value. Discount bonds may also be a bond currently trading for less than its face value in the secondary market. A bond is considered a deep-discount bond if it is sold at a significantly lower price than par value, usually at 20% or more.
Tenancy by the entirety is a type of concurrent estate in real property that occurs when the owners of the property are married. Each spouse has an equal and undivided interest in the property. In essence, each spouse mutually owns the entire estate. In the event that one spouse dies, the full title of the property automatically passes to the surviving spouse. A tenancy by the entirety permits spouses to jointly own property as a single legal entity.
Proprietary trading refers to a financial firm or commercial bank that invests for direct market gain rather than earning commission dollars by trading on behalf of clients. Also known as prop trading, this type of trading activity occurs when a financial firm chooses to profit from market activities rather than thin-margin commissions obtained through client trading activity. Proprietary trading may involve the trading of stocks, bonds, commodities, currencies or other instruments.
In real estate, an open listing has two meanings. Open listing can refer to a property for sale whose owner is using multiple real estate agents in order to find as many potential buyers as possible. The agent who brings in the winning buyer for the property collects the commission.
The Kuala Lumpur Stock Exchange (KLSE) was the precursor exchange to the Bursa Malaysia Exchange. Its main index is the Kuala Lumpur Composite Index (KLCI), composed of the top 30 companies on the Bursa Malaysia Exchange.