Questions tagged [financial-literacy]

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

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14
votes
2answers
237k views

What are “headwinds” and “tailwinds” in financial investments?

I've seen/heard these terms in various writings & broadcasts lately. What do they mean?
9
votes
3answers
9k views

Foreclosure process: What happens when a bank forecloses on a home?

I know it is a long complicated process, but what is the high level overview of what a bank does when it forecloses on a house? Beyond credit getting hurt, what else? Where does the bank get it's ...
0
votes
1answer
181 views

In what circumstance would a company want to establish an SPE to engage in following investment?

I was reading a book explaining Special Purpose Entities (SPEs) and an example is used in the book: a firm could sell loans it has made to customers to an SPE that issues bonds to purchase the ...
1
vote
1answer
81 views

Investing in Hedge Fund on a Rolling Basis

If I invest in any sort of hedge/mutual/index fund when the fund performance is up/down, for ex. +/-20%, and I invest $100k the next day - do I share the 20% loss or gain automatically in a pooled ...
5
votes
4answers
8k views

If I buy a share from myself at a higher price, will that drive the price up so I can sell all my shares the higher price?

Suppose I buy 100 shares of Apple at $200 and I want to increase the share price. If I sell 1 share at $210, and at the same time log in to buy the share at $210, will the share price increase to $210 ...
220
votes
21answers
73k views

Why isn't everybody rich?

This question came up after reading this question (stock market long term risks), in which it is re-iterated (as it has been many times on this site), that investing in the stock market, especially an ...
0
votes
3answers
616 views

Should I only look at P/E ratio when valuing a stock?

A company is earning 40 cents per share and is trading at $6.00. From there I get the P/E ratio to be 15. It does not have much growth potential and it's earnings are relatively stable and has been ...
3
votes
1answer
516 views

Which compound interest formula can I use to find the final balance with monthly contributions that increase yearly?

I apologise in advance if this has been asked already - I can't seem to find a similar question. I am looking for a formula to find the final balance when provided the following variables: Initial ...
6
votes
1answer
166 views

Would investing in commodities help me build my home?

I am from India and I plan to build a new own home next year. The present price of steel is lower than in past years. Is it worthwhile to buy steel from commodity exchanges now and then switch to ...
17
votes
2answers
1k views

Can someone explain the different kinds of annuities?

So in my retirement and personal investing I have some stocks (very little), a Roth IRA, a Roth 401K and a Traditional 401K (later two are from work and I split things right now). At my age and ...
2
votes
1answer
3k views

What is an “undervalued” or “overvalued” bond?

Here's a small excerpt from Bond Valuation section on Investopedia: Determining Whether a Bond Is Under or Over Valued What you need to be able to do is value a bond like we have done before ...
119
votes
13answers
18k views

Why does gold have value?

I'm curious about why is there so much financial interest and news coverage about gold. It's hard to do things like buy food or pay the rent with gold, but I can do this with cash. Gold doesn't yield ...
5
votes
5answers
2k views

What marks the beginning of a bear market?

I continue to hear that our "aging bull market" continues to plod along, but the indices are falling relative to their high point in late January. What is the metric by which one determines the ...
32
votes
7answers
18k views

Bought stock at higher price than current price

I wanted to buy stock ABCD at a price of 880. The current price was 900. When I bought, I set 980 instead of 880 and it was fully executed. I don't understand how it is possible to buy stock at a ...
2
votes
1answer
128 views

Notice of Conversion for 3(a)10

I am trying to figure out what this means. Is this good or bad? http://markets.businessinsider.com/news/stocks/metrospaces-announces-that-it-will-not-honor-notice-of-conversion-for-3-a-10-due-to-...
0
votes
2answers
70 views

How are buys executed? [duplicate]

Looking at any given stock, I can see top ten Sellers (cheapest first) and top ten Buyers (highest first). Question is.. does the top buyer buy down through the seller list until satisfied, then buyer ...
4
votes
2answers
443 views

After Hours S&P 500

I know that while major stock markets are closed, many instruments continue trading overnight. I imagine that some of these instruments track the S&P 500. Is there some easy way to follow these? ...
4
votes
6answers
371 views

How to acquire skills required for long-term investing?

Imagine I want to buy shares of companies and hold them for a long time. Ideally, the valuation of these companies and/or the dividends they pay will increase over time. I asked a friend what skills ...
0
votes
1answer
53 views

What is Hosted Staking? [closed]

There are few ICOs are using Hosted staking as a term rather Lending. I want to understand what is this hosted staking and how it works.
18
votes
2answers
2k views

Special Needs Trust and Financial Planning

update: I may not have explained it clearly in my post below but I don't believe the intent is to close out the 401k or fund the life ins. policy using it. I will clarify with the consultant what the ...
3
votes
5answers
5k views

Is it possible to influence a company's actions by buying stock?

I have a question about shareholder activism. Since the Dakota Access Pipeline has major support by the general population, would it not be possible to buy their stocks, bring down the price of the ...
2
votes
1answer
87 views

Why do so many tools and sites not show total returns of mutual funds?

My understanding that the total return of a fund is the NAV capital return plus the income return (dividends, etc). It seems to me that (outside of tax implications) total return is the most critical ...
0
votes
3answers
275 views

How Market Price works?

This is probably a very dumb question but I don't get it. Usually people say if there are more buyers then the price goes up, and if there are more sellers it goes down. Why is that? And in which ...
5
votes
2answers
266 views

What does “cashes in many of his Enron share options” mean?

I'm studying for an organisational subject and I was reading the following paragraph: August 2001 Jeffrey Skilling resigns after just six months; Ken Lay returns to day-to-day management of ...
3
votes
1answer
99 views

How to get visibility into contributions to assets

I'm using double entry with Assets, Expenses, Income, Liabilities, and Equity. To illustrate my question with easy round numbers: Income one month is 10k; 5k goes into an asset like a 401k account (...
3
votes
3answers
284 views

Revenue Vs. Earnings

I have been trying to understand the impact of news and earnings reports on stock price, but this one has confused me. Starbucks released earnings on the 25th and came up short on expected revenue but ...
0
votes
1answer
80 views

Negative Balance terminologies

When your CC balance turns negative, then it's an overdraft right? What are the other terms for Negative Balance / Overdraft?
14
votes
4answers
2k views

Why would I want a diversified portfolio, versus throwing my investments into an index fund?

Index funds are well-known to give the best long-term investment. However, most financial planners recommend having a diversified portfolio, including components such as bonds and foreign markets. I ...
2
votes
1answer
62 views

Questions about Multi Exchange Listed Equities

I hold a position in a Canadian oil stock that is on the TSX as well as the NYSE. I read this post: Are stocks only listed with one exchange in one place? but still had some questions Are Multi ...
6
votes
1answer
2k views

Why did a “Bought Deal” Drop the share price of Canopy (WEED)?

Recently a Canadian bank (BMO) has participated in a "bought deal" with Canopy (WEED) for 5 million shares valuing 175 million dollars. The share price went down. Did the share price go down because ...
2
votes
1answer
186 views

Investing and compound interest? [duplicate]

I see lot of information about the power of compound interest and how it can help money grow. I understand the mathematics of compound interest but I have no idea how to take some money and make it ...
4
votes
1answer
100 views

Chained CPI and new tax bill

This morning I heard about how the new tax bill will be using "chained CPI" calculations instead of the traditional CPI calculations, and people seemed to be pretty upset about it. What is "chained ...
187
votes
19answers
26k views

How smart is it to really be 100% debt free?

For the last 2 years, I have been trying hard to be debt free without affecting my personal cash flow. I am by no means a rich person, but I have a decent salary. I still have debt, specifically ...
0
votes
2answers
231 views

Mathematical proof that NPV always negative when rate of return less than discount rate

Can anyone provide a mathematical proof that NPV is always negative when the rate of return is less than the discount rate? That is suppose that we have a single initial input, C0 a constant known ...
0
votes
1answer
135 views

What's the difference between a company's after-tax profit and their sales/revenue?

Two fundamental analysis formulas have got me confused. One is the EPS (earnings per share) and the other is P/S (price/sales ratio). If I understand the formulas correctly, EPS is calculated by ...
7
votes
5answers
9k views

How long does it typically take for a credit card purchase to appear online (even in pending) [closed]

If you've made a purchase online, how long will it take for the purchase to appear in your online account, even if it's just in pending. Clarification: What's the typical and maximum time from the ...
3
votes
1answer
191 views

Who calculates exchange rates?

I was discussing exchange rates with a friend and realized we have a different understanding of how they work. We both understand that floating exchange rates are dictated by market forces (supply/...
0
votes
1answer
76 views

do Convertible bond/note always convert?

This is how i picture convertible notes to work: the company gets a loan from a investor, and pays a certain annual interest. the note also has a conversion price, and if the market price of the ...
1
vote
2answers
102 views

How to pick from several products/services to maximize utility considering the cost of each option?

What is the proper way to consider the utility of a product/service versus its cost in order to make the best rational decision to get the "most for my dollar" if there are several choices for me to ...
-1
votes
4answers
2k views

Buying stocks at one price then buying more at a higher price

If I bought 100 shares at $100 then 2 weeks later bought an additional 100 stocks at a $150, does the cost basis for my original stocks stay the same price of $100?
0
votes
1answer
105 views

Do companies sell new securities before or after a prospectus about the offering?

There wasn't any specific information on when exactly the transactions take place. So are the companies able to engage in the actual sale of the new securities prior to giving the public the base ...
2
votes
1answer
313 views

Could ignoring sunk costs be used to make an investment look more attractive when it's really not?

Could ignoring sunk costs be used to make an investment look more attractive (in terms of NPV) when it's really not? For instance, this is an example of the sunk cost fallacy from Principles of ...
11
votes
1answer
21k views

How do wire transfers get settled?

Say I open accounts on Bank A and Bank B. I deposit $20 in Back A. I then initiate a wire transfer to my account in Bank B. I drive over to Bank B and withdraw $20. Bank A now has $20 extra and Bank ...
1
vote
1answer
308 views

Why does high frequency trading remove small bid-ask spreads?

"The major benefit of HFT is it has improved market liquidity and removed bid-ask spreads that previously would have been too small." - Investopedia "The size of the bid-ask spread from one asset ...
0
votes
1answer
122 views

What is Share Consolidation? [duplicate]

Subject Share Consolidation Type Consolidation Description CONSOLIDATION OF EVERY 4 ORDINARY SHARES IN PDZ HOLDINGS BHD ("PDZ" OR THE "COMPANY") ("PDZ SHARES" OR "SHARES") HELD AT 5.00 P.M. ON 4 ...
1
vote
2answers
109 views

Stock Split mean double the stock units?

Financial Year Subject Subdivision Type Stock Split Description SHARE SPLIT INVOLVING THE SUBDIVISION OF EVERY 1 ORDINARY SHARE IN PENTAMASTER CORPORATION BERHAD ("PCB") INTO 2 ORDINARY SHARES IN ...
5
votes
1answer
2k views

When can an “insider” sell shares to the market?

If all the necessary information about the company at the moment is already disclosed to the public, are insiders allowed to immediately sell as much as they want? Is there a limit?
12
votes
3answers
405 views

Solid reading/literature for investment/retirement/income taxes? [closed]

I'm striving for financial literacy and education. I've been really frustrated with most of the literature that's out there surrounding retirement, income taxes, and investment. Most of it seems ...
4
votes
1answer
243 views

Mathematical proof for justification of interpretation of negative IRR

What would the mathematical proof look like of the interpretation of negative internal rate of return shown here look like which says that "Negative IRR indicates that the sum of post-investment cash ...
11
votes
2answers
275 views

Why companies appear in several stock exchanges?

Let's say I want to buy stocks of Sinopec which is a Chinese company. I would expect to buy it from HKS and in local currency. With the Degiro broker which is Dutch, I see "Sinopec Shangai Petrochem-H ...