Questions tagged [financial-literacy]

for questions related to understanding basic concepts in finance or certain terms in a particular context

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3
votes
4answers
8k views

“Derivative” and “asset-backed security”: Same concept, or related?

Derivative and asset-backed security seem to be similar, as both are based on some other assets. So I wonder if they are the same concept?
4
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3answers
343 views

Why hedge when one can simply reduce the position size?

Often, I would read about traders/investors hedging their position in case things do not go their way. I find this strange. If one were unsure, then wouldn't it be better to simply reduce the position ...
2
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2answers
100 views

Cash Transaction For Real Estate or Otherwise

When a seller of property of significant value or even an expensive exotic car requires a "cash purchase", possibly amounting to millions, is that actual cash - meaning buyers are hauling around ...
3
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2answers
227 views

Are all “market beating” investment strategies/products scams?

There are many newsletters, advisors, and other providers of financial/investment information or services that claim (usually backed up by back-testing results) that they provide a way to beat/...
1
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1answer
2k views

What does the settlement date of short interest mean?

NASDAQ lists data like this for the short interest in Walmart: Settlement Date Short Interest Avg Daily Share Volume Days To Cover 4/30/2013 27,988,175 7,442,123 ...
0
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1answer
150 views

Bond sell off vs stocks

U.S. stocks fell following a bond selloff that sent yields to multi-year highs. New filings for unemployment fell unexpectedly to near 49-year lows. The benchmark 10-year U.S. Treasury yield rose ...
31
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2answers
10k views

Is my stock gone forever from a reverse split / bought by another company?

I'm a complete novice in regards to investing and had purchased some shares of OXIS from TD Ameritrade back in March of 2015 (NASDAQ). The company (OXIS International) became very devalued and did a "...
1
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1answer
141 views

What is payment period, and why is it equal 100 in this mortgage table?

Here’s the table: I think the payment period is a month, but I don’t understand why it’s 100. The image is taken from this Excel exercise: http://web.utk.edu/~dhouston/excel/exer3.pdf
3
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2answers
737 views

Does FDIC insurance at one bank cover each account?

I was reading that FDIC insurance covers accounts up to $250,000. Does this mean each account you have at a bank is insured up to $250,000 or is $250,000 the maximum for all accounts at a bank? Also,...
1
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3answers
140 views

Types of investments with built-in puts or similar safety features

I recently learned of indexed universal life insurance. One of the features of this type of investment is that a portion of the funds are used for puts, so the investment rarely (never?) loses money ...
0
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5answers
495 views

Lump sum investment vs SIP when I have the lump sum

I am fresh out of college and placed with a good job. It's been two months now and I have with me (after making all deductions): Two months salary Signing bonus = Equivalent to another 1.5 months of ...
0
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2answers
395 views

What is Systematic about Systematic Investment Plan (SIP) and who invented it?

What is Systematic about Systematic Investment Plan (SIP) and who invented it ? Even if we invest in real estate, or recurring deposit, we do it systematically; Why is only SIP considered systematic ?...
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1answer
2k views

Why does the calculation for IRR use revenue, not profit?

As far as I understand, IRR is calculated by finding the discount rate where the NPV equals zero. What I don't understand is why the revenue (or cash inflows) is used in the calculation instead of ...
0
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2answers
2k views

Does MTM of a Bond include its accrued interest?

I understand that the MTM of a bond refers to Mark to Market value. I am trying to understand whether such price also includes accrued interest if any. I tried searching a lot in google, but couldn't ...
93
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9answers
23k views

When someone's ability to pay is suspect, why would it make sense to give them more expensive credit?

Answers to the recent question "Why don't bond makers just get loans?" Seem to take it as a given that lending someone money at a 12% interest makes sense when there is already doubt about their ...
-1
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1answer
11k views

What does “LLP” stand for in the name of an organization?

What does LLP stand for? As in the example name "Flood Law Group, LLP".
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2answers
256 views

Options when go private

What happens to options when a company goes private. For example, if I have a call option on Tesla right now and it goes private at 420/share, what will happen to my options?
24
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4answers
8k views

My out-of-the-money call options are near expiration and won't sell in the open market. What are my choices?

I had attempted to sell my contracts off today but was unsuccessful. They are currently OTM options and will expire tomorrow. What can I do to minimize loss and why was I unable to sell?
0
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2answers
88 views

Short term dividend payout [duplicate]

I read that as long as I hold a stock for two business days, I will get a dividend? What if I make multiple trades for one stock. For example, if I buy 20 shares and sell 20 two days later, then I buy ...
2
votes
2answers
289 views

Partially vs. Fully Amortized Loan

Isn't the article beneath wrong to interpret a Fully Amortized Loan as a loan with 7 years maturity? Isn't the correct comparator a Fully Amortized Loan with 30 years maturity, and 30 years ...
1
vote
3answers
478 views

Foreign money comes to my account

A foreign friend wants to help me by transferring money to my savings account. I got an email from RBI telling me go for online procedure through a link. After completing 3 out of 2 steps, asking me ...
5
votes
1answer
203 views

What are the mechanics of tracking stock?

I'm curious about tracking stock. Take, for example, NASDAQ:DVMT. It's a tracking stock issued by Dell for VMWare (NASDAQ:VMW), which is partly owned by Dell. The idea is that people could invest in ...
1
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1answer
66 views

Indian Mutual Funds

I am new to Stock Markets. I have interests to invest my savings on Mutual Funds. When I looking for Higher Return Mutual Fund securities, I have seen some information there. For Example, I am ...
1
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1answer
501 views

How to calculate mutual fund return

How do you calculate the annual return of a mutual fund? I understand roughly how mutual funds work, and I'm trying to decide which mutual funds to invest in, but to prove to myself that I understand ...
4
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2answers
346 views

What is a mutual fund?

From Investopedia I understand that a mutual fund is a pool of funds used to invest in various assets. I am struggling to understand what it is. I wouldn't be able to spot a mutual fund based on this ...
0
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1answer
167 views

What is LEVERAGE SHARES PUBLIC LIMITED COMPANY LEVERAGE SHARES 2X FACEBOOK ETP (FB2)

I was looking into buying FB shares and discovered something called 'LEVERAGE SHARES PUBLIC LIMITED COMPANY LEVERAGE SHARES 2X FACEBOOK ETP (FB2)' . What is this and how does it relate to the usual FB ...
0
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1answer
181 views

Why do CDO's have a reinvestment period?

If CDO's collect all the cashflows from their underlying assets and then pay them out to the CDO investors whats the need for a reinvestment period? and where is the principal that is being reinvested ...
1
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2answers
167 views

Stock split vs bonus issue

I've spent a good amount of time wracking my brain about how a bonus issue actually benefits the stock holders. For example in a 1:1 bonus issue, the price of a share corrects to half of the pre-...
1
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1answer
55 views

Meaning of 10-year treasury note price change

At this moment, WSJ quotes 10-year T-note as below: Price: $100 3/32 Price change: -2/32 (-0.08%) Question 1: Where does the -0.08% change come from? To me, it seems the old price is 100 5/32. ...
2
votes
1answer
1k views

Can I short a stock for a long amount of time?

The next recession is inevitable, if what I read is to be believed. Whether it happens tomorrow, or in 10 years, it's coming. Why shouldn't I short many stocks, and hold on to them for whatever ...
0
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2answers
218 views

What is option execution?

What is the meaning of "the execution of the Option" or "Option execution" in the examples below? Is it "signing"? The Completion, as well as the execution of the Option may be carried out if on ...
11
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3answers
5k views

What does market cap (or market capitalization) mean?

When I look at my Google finance page, and I look at a company, lets say Citigroup for example, and I see that the market cap is 83.45 billion, what does that mean? Does that mean Stock Price X ...
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2answers
170 views

How do stocks rise?

If a stock shows great performance on the income statement, will the prices rise gradually or immediately after the release of information to the public?
3
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2answers
164 views

Understanding corporate earnings manipulation

While reading earnings manipulation on investopedia, I came across following sentences: Another form of manipulation is to change company policy so more costs are capitalized rather than expensed ...
4
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2answers
144 views

From the book of Benjamin Grahm “The Inteligent Investor” : chapter 5, pg 115, what does he mean imposing some limit

I am totally new to finance and investing world, hence please bear my basic question. I have a query on Ben's book The intelligent investor Page #115. point #4 it says : The Investor should impose ...
3
votes
2answers
829 views

Is there a standard ratio of preferred shares to common shares in a company?

I'm confused about how common and preferred shares coexist. Is a single preferred share always equal to the same amount of the company as a single common share, or does a preferred share somehow ...
14
votes
2answers
4k views

Stock Split seems not to have changed the Share Price. Why?

I was recently looking at the financial charts of TCS(Tata Consultancy Services) and noticed that the TCS offered 1:1 bonus on 31st May, 2018. I noticed that the price of the share stock did not ...
4
votes
4answers
2k views

Is the blockchain similar to double-entry book-keeping?

As far as I know, blockchains keeps transaction records from the beginning of time. This lets the blockchain retain a history of traceable transactions so it can maintain validity. Double-entry book-...
3
votes
2answers
182 views

When you buy an ETF, do you give cash to the fund manager?

When you buy a stock from the market, you exchange it with someone. When you buy an ETF, do you give the fund manager money so that he can buy more of the assets that the ETF is supposed to mirror, or ...
4
votes
1answer
499 views

What is the difference between net profit and net banking income

For Societe Generale Analysts had expected net profit of €811.5m on net banking income of €6.47bn. Why are they so different?
6
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8answers
1k views

Why are tech stocks risky investments?

I've seen this mentioned so much in writings about intelligent investing, but I don't understand why. Are Amazon and Netflix tech stocks?
2
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2answers
61 views

Do knock-out call options become worthless when the underlying stock is split?

Suppose you own KO call options based on a stock. The knock-out level would be at $90, the stock currently is at $100. But then the stock is split 1:2, so suddenly the stock is worth $50. Do the ...
2
votes
1answer
51 views

What is the difference between LIQUIDATED fund and ACQUIRED fund

There are some funds that show up as "liquidated" when googled, which implies that it closed due to a bad performance. Some funds that show up as "acquired by XYZ (ticker of another stock that's being ...
2
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4answers
255 views

Bonds: Why repay the principal at the maturity date all at once?

Bank loans have options to repay the principal and interest over the time. Correct me if I'm wrong, but AFAIK, bonds don't have these options but to repay the principal all at once. And this ...
38
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9answers
10k views

Why would the bidding on a foreclosed property start at the outstanding amount of the loan?

I've read from several reliable-looking sources that if a foreclosed house goes up for auction, the bidding usually starts at the outstanding amount of the loan (plus fees, etc.): Example Money Talks,...
2
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2answers
77 views

How do trading platform like TD-AmeriTrade or Fidelity work?

When an individual places a trade on an online brokerage, is it against their order book or is it against the order books of exchanges like NYSE? Do brokerages warehouse some risk when making markets? ...
0
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3answers
2k views

What's difference between LIMIT and STOP orders for entry?

After re-reading the descriptions same and again, I can't clearly say, what's the difference between STOP and LIMIT orders actually. example: i.e. Stock price is at 5.60, and I want to trigger ...
2
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1answer
76 views

What is the difference between existing stockholders and new investors?

TrovaGene (TROV) just did a reverse split today n the premarket, and post market they announced an offering. In the offering they state: If the underwriters exercise in full their over-allotment ...
4
votes
1answer
201 views

What shares are actually being sold in “ATM” format release?

I recently invested in $HMNY, a listed company and the owner of MoviePass. I invested it simply because that I love the MoviePass idea. Then, rumors says that the company wouldn't last long for the ...
0
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1answer
23 views

Where can I find articles of incorporation for Canadian financial institutions?

Search for a Federal Corporation does not have financial companies. A list of financial companies is given here.