Questions tagged [financial-literacy]

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

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0
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1answer
175 views

Loan Prepayment

I will be applying for a car loan shortly, and trying to evaluate various lender schemes. I was not really sure when its mentioned as No Pre-Payment Penalty or Foreclosure Charges Let say I have ...
0
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1answer
370 views

How to read WSJ US Treasury quotes

I am trying to understand how they calculated "asked yield". If anyone can explain it, I really appreciate it. I would like to see the mathematical formula and the calculation.
3
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1answer
4k views

ADR vs Ordinary shares

Why should someone prefer an ADR if he can get the ordinary share from the same stock exchange? Yes, ADRs often have multiple ORD bundled but they also cost more (fees for the company who manages ...
3
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1answer
1k views

Compound Interest Formula With Monthly Investment Increase

I'm looking to solve this problem: If I were to start investing now, With a 4% annual return compounded monthly what is the function for my return if my monthly input is initially $2000 then for ...
5
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1answer
331 views

What actions 'encumber' shares?

Reading through a shareholder agreement, I encountered the following section: Encumbering shares Subject to a special resolution of the shareholders to the contrary, no shareholder shall ...
1
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1answer
185 views

How do I know if my mutual fund is compounded?

I have money in a S&P Index Fund (VFIAX specifically). How do I know if my index fund is compounded? Furthermore, at what intervals is it compounded? And more importantly, should it be compounded?...
26
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4answers
49k views

When a stock price rises, does the company get more money?

When a stock price rises, does the company get more money?
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2answers
73 views

Effect on Bond asset allocation if Equity markets crash?

Let's say "Tom" allocated a large amount of capital in some fund's (it's TIAA-CREF, actually) bond assets. In our fictional scenario 2 things are going to happen in the next year: The equity markets ...
2
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1answer
149 views

Interest rates and bonds: What is their relation?

I read in a study text that: When interest rates are decreasing, investors will migrate their bonds from short- to longer-term ones When interest rates are increasing, investors will migrate their ...
1
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2answers
307 views

If I deposit money as cash does it count as direct deposit?

If I deposit money as cash does it count as direct deposit ? I am asking before I got an offer from a bank if I do one direct deposit within 90 days. Free money is good.
66
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9answers
17k views

Why do financial institutions charge so much to convert currency?

With all the modern technology that we have, I am astonished that financial institutions charge such exorbitant prices for currency conversions. My bank, Fifth Third, charges a 3% conversion fee, ...
1
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2answers
226 views

How to manage household finances (income & expenses) [duplicate]

We are a young family of two, both working and having comparatively equal income. The question is how do we budget our common expenses (relatively equally) and at the same time preserve our freedom to ...
3
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3answers
684 views

Accounting equation: does income really decrease equity?

I am new to using double-entry bookkeeping for personal finances. GnuCash uses a variant of the accounting equation that has five variables, and which seems to be known colloquially as an "expanded" ...
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2answers
151 views

Advantage of Financial Times vs. free news sources for improving own knowledge of finance?

I am a student living in the UK and I am trying to improve my 'commercial awareness' for applying to finance related jobs. (In particular, algorithmic trading.) What advantages, if any, does reading ...
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1answer
89 views

Funds managed by companies that go bankrupt?

With all the talk of Wells Fargo looking pretty shaky, what's the deal with people that have investments through them? It's their fund, but it's not really in them? What happens to holders of ...
12
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3answers
3k views

Available credit more than credit line

I have a credit card with a credit line of $400. I have the whole $400 available to spend right now. I received a refund of $400 from a company. That makes my total available balance go up to $800. ...
2
votes
2answers
266 views

Buying an ETF vs. The explicit Index

Let's say I want to invest in some Index which contains 30 stocks. I can just buy and ETF which tracks the index, but I guess I can also simply buy the 30 individual stocks of the index with their ...
2
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1answer
103 views

Investing Account Options

I am new to this SE community so please inform me if there are ways I can edit or improve this question, a more appropriate place to post it, or better tags and title. My grandmother is beginning to ...
4
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2answers
618 views

Why are cash advance limits lower than my credit limit?

All my credit cards allow for cash advances. But for some reason the limit for cash advances are always way lower than my actual credit limit, why is this? If a bank trusts me with credit to purchase ...
2
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1answer
1k views

How profit margin can be higher than operating margin?

I was looking at fundamentals for SalesForce (CRM) and noticed that their profit margin higher than operating margin: Profitability Profit Margin 1.48% Operating Margin (ttm) 0.21% In my ...
1
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1answer
322 views

Announcement of rights offering (above market price) causing stock price increase [duplicate]

I am befuddled by the announcement of a rights offering in which stockholders were given the right to purchase the stock at a price of 5.50$ when the market price was at 4.40$. This seemed very ...
11
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3answers
8k views

Is there a term that better describes a compound annual growth rate (CAGR) when it is negative?

When calculating rates of return for an investment or portfolio over time, whether to report or compare performance, one frequently calculates the Compound Annual Growth Rate (CAGR). I've got a ...
1
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1answer
130 views

How to read a chart after a split?

I am curious to know how stock market splits (and reverse splits) affect the way that the markets show their data and charts? For example, IMUC was reverse split 40:1 on November 2017. The historical ...
2
votes
2answers
274 views

Clarify Microsoft's explanation of MIRR

I don't understand Microsoft's MIRR example. The second parameter is the finance_rate: Finance_rate Required. The interest rate you pay on the money used in the cash flows. The example then ...
2
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2answers
99 views

How do investment banks evaluate a private firm going public? Is it based on the assets owned by the company?

Suppose a private firm(sole proprietor) has assets worth 50crs(zero Liability). Now I want expand my company by taking it public. I reach out to an investment Bank. Will the investment bank evaluate ...
30
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3answers
8k views

If I can put together a loan that pays out like a 7.579%-a-year loan, but has a total term of 18.63 years … would you be interested?

I'm reading about Household International's fraudulent mortgage interest rate. According to Michael Lewis, Household disguised a 15 year, fixed-rate loan as a thirty-year loan. The sales would offer ...
1
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2answers
200 views

company market capitalization to total (annual) stock market capitalization [closed]

I have a panel dataset with 13 countries and 10 years (1999-2009). I'm trying to calculate share/percentage of the average firm market capitalization to average stock market capitalization for each ...
2
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2answers
242 views

Futures and Bonds Pricing and Contract Terms

What do the listed futures price, say, here, actually mean? I am confused because my understanding of futures is that any two people can enter into a contract at any price with any delivery date. ...
35
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5answers
19k views

How can a credit card company make any money off me? I have a no-fee card and pay my balance on time

How does a credit card company make any money off of me using their card if there are no fees associated with the card (I don't pay any extra) and I pay off my balance on time every month (so I don't ...
6
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3answers
233 views

How much extra to put towards loans? I can't judge which gives me more utility

So I can now calculate exactly when my loans would get paid off by ensuring I consistently contribute some amount X to my loans where X is greater than the sum of the monthly minimums, where the extra ...
1
vote
1answer
263 views

Why doesn't the market capitalization of a company match its acquisition price during a takeover?

Amazon bought Whole Foods for $13.7B, but Whole Foods' market capitalization jumped to $17.6B. How are the shareholders of Whole Foods going to ultimately compensated? Do their shares turn into cash,...
33
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8answers
9k views

Are services provided to Google employees taxed as income or in any way?

The particular service I want to look at is food (though I think the same ideas should apply to all services). So Let's say that a Google employee spends a dollar on food, purchasing groceries. They ...
0
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1answer
51 views

logistical details of interest and dividend payments on assets traded on the secondary market?

Forgive me if this is a silly or extremely basic question, but I was wondering how the logistics of interest and dividend payments are handled on assets, such as mortgages, bonds, stocks, etc. I ...
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3answers
287 views

What is the lifespan of a series of currency?

I traveled to Canada from the USA and as a souvenir I decided to bring some Canadian cash back with me. While I plan to keep it just as a souvenir, it made me wonder how long a currency can legally be ...
9
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1answer
1k views

Presenting negative numbers using parentheses: where does this practice come from? [closed]

The standard accounting way is always to show negative numbers in parentheses. Where does this practice come from? For example, this cash flow statement use parentheses indicate negative values:
0
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1answer
94 views

What is the rate of return for a security when there is no risk-free rate (CAPM)?

Let say I want to invest 1000€ in cryptocurrencies in order to get 2000€ In the famous CAPM, the relationship between risk and rates of returns in a security is described as follows: For a security ...
1
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3answers
253 views

Why don't financial advisers count home value?

I notice that retirement/financial advisers don't seem to consider home value when tallying retirement savings. Why is this? Not having to pay rent every month is a huge advantage during ...
4
votes
2answers
12k views

How do dividends of the underlying security in a security futures contract affect the security futures price?

I would assume that increases in any dividends would increase the price of the underlying security, therefore causing a relative increase to the security future price. Or is this relationship more ...
150
votes
10answers
32k views

Do I make money in the stock market from other people losing money?

Basically I am new to stock trading and neglect to see the differences between trading stocks and betting on sports. Basically I am "betting" on which company will do well, and this can change due to "...
1
vote
1answer
83 views

Is there a better term that means “the amount subject to a commission rate”? [closed]

If you were building a commission report laid out like the example below, is there a succinct term or word that would work well for the third column? Employee Commission Type ??????????????? ...
2
votes
2answers
721 views

How did my number of shares get reduced?

I bought 1600 shares of a penny stock for about $90.00. I have been holding this stock for a few years. The company issued new stock at $5.00 per share but devalued my stock to its pre issue of $0....
0
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1answer
211 views

Nominal value of shares

If I hold shares that are quoted as "Company XYZ Euro 0.01" But the stock exchange listing is for "Company XYZ Euro 0.0002" (In both cases the numbers are part of the stock name - the price is in ...
58
votes
9answers
17k views

Why are 30-year mortgages seen as unwise, if you can pay off the loan in a shorter period of time anyway?

I'm slowly working towards buying my first home (yay!), and have been playing around with the numbers. As far as I can tell, there's literally zero advantage for getting a 10 or 15-year mortgage since ...
0
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2answers
840 views

What are “trailing 12-month total returns”?

In a blog post about momentum strategy, I have read the sentence At the end of each month, compare the trailing 12-month total returns of U.S. and foreign stock markets. What exactly are "...
5
votes
3answers
519 views

First Home Purchase - Understanding Closing Costs

My loan officer earlier gave me an estimate of $11,485 towards closing cost, now when I applied for loan I see the estimate going up to $17,110. For example the Origination Fee Charge increased/...
2
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3answers
130 views

Can a lucrative business balance its revenue with expenses (of buying some assets) to seem unprofitable on paper?

Maybe to save tax or because they could really use those assets? My main concern is how do I look out for this strategy because all the things I usually see P/E, RO-whatever, etc. fail and I would ...
3
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2answers
528 views

How much accounting knowledge is needed to read financial statements of publicly traded companies?

"You have to understand accounting and you have to understand the nuances of accounting. It's the language of business and it's an imperfect language, but unless you are willing to put in the effort ...
0
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1answer
277 views

What does “price crunch” mean?

What does "price crunch" mean in this quote? Seventy percent of respondents said they had altered their allocations in regard to euro-denominated assets, and.a third of the respondents said they ...
20
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5answers
17k views

Why don't SPY, SPX, and the e-mini s&p 500 track perfectly with each other?

These tickers (SPY, SPX, /ES) are all based off the S&P 500 yet the relative lows and highs diverge. Can someone provide a basic explanation what causes this to happen? I feel like it may stem ...
4
votes
1answer
686 views

What are the ways compounding can occur from an investment in stocks and bonds?

I've been trying to understand the multiple ways stocks and bonds compound (under the definition of compounding as generating earnings from the reinvestment of previous earnings, my understanding of ...